Addressing the Banking Industry View

The banking industry has extensive resources to develop and propagate their arguments against a much-needed Royal Commission or Commission of Inquiry into the sector.

Narrative analysis of the industry arguments reveals a common thread:  the highly suggestive, emotive fear-based arguments do not withstand critical thought.

‘It will cost hundreds of millions taxpayer dollars…’

But the direct cost to victims and indirect costs to taxpayers of systemic unconscionable and criminal misconduct is far higher.

A Royal Commission or Commission of Inquiry would be an investment in understanding the root causes, holding banks and their executives to account, compensating affected victims and making informed policy decisions to prevent such misconduct well into the future.

‘It would take many years…’

Victims have endured the horrendous impact of unresolved unconscionable and criminal misconduct at the hands of banks for many years, many  with no current prospect of resolution of their matter.

The inquiry could be broken down in prioritised stages, in the same way the Child Sexual Abuse Royal Commission was.

If a Royal Commission had been instigated in 2014, when a Senate Committee first recommended it, we would have achieved significant progress by now.

‘It will be a lawyers picnic…’

Although the basis of this argument is somewhat unclear, it appears predicated upon a dislike of lawyers and the perception that lawyers ‘feed’ upon excessive fees.

Most victims are likely to welcome lawyers ‘feeding’ at a bank’s expense, instead of their own for a change.

‘It would create ‘uncertainty’ for the industry…’

What uncertainty?  Uncertainty around whether the industry can continue systemic unconscionable and criminal conduct without consequence into the future?  Uncertainty around whether senior executives will finally be held personally to account for their conduct?  Uncertainty around whether prosecutions may result from systemic criminal conduct?

Isn’t this the type of ‘uncertainty’ that banking victims are looking for?

‘There have been dozens of different inquiries with more currently underway…’

The inquiries to date have been ad hoc, not framed to investigate systemic misconduct and have proved to be largely ineffective addressing the serious issues caused by the banking industry.

Consequently, this argument actually provides a strong reason for a Royal Commission or Commission of Inquiry.

‘A Royal Commission or Commission of Inquiry would get in the way of industry reform…’

Really?  How?  This would only be the case if industry reform:

  • Was not genuine.
  • Was not headed in the right direction for consumers.

‘Shareholders rely upon us for to fund their retirement…Three out of every four dollars of profit is paid to shareholders…’

Shareholders make informed decisions in relation to their investments, balancing risk and reward.  Banks should not engage in conduct that would risk reducing shareholder returns through misconduct charges.

If investors are prepared to accept higher returns resulting from institutions profiting through engaging in systemic misconduct, those investors must also accept the risk of lower returns in the event a bank is held to account for that misconduct.

Is the industry subtly using shareholders as ‘human shields’ here?

‘The misconduct is in the past…’

The systemic banking misconduct is clearly not ‘in the past’.  It continues to be reported.

How many more scandals have gone unreported?

This attempt to reposition conduct as ‘historic’ and ‘reformed’ is clearly wrong.

‘The misconduct is the result of a ‘few bad apples’…’

If a ‘few bad apples’ can cause so much financial and emotional harm, we certainly need a Royal Commission or Commission of Inquiry to understand how this is possible.

If it is genuinely only a ‘few bad apples’, it will make the job of the Commission relatively simple, short-lived and inexpensive.

‘We don’t know what it would achieve…’

This is possibly one of the biggest self-serving concerns of the banking sector.  To date, the industry have had a lot of control over ‘investigations’, where they know that control will dictate the outcome – in favour of the bank.

Making it a fair playing field for victims, by removing the banks’ control of evidence is likely to achieve a genuine result.

The banks might not know what that process might achieve, but they know they certainly don’t want the outcome of that process: justice for victims.

‘It’s populist bank bashing…base political opportunism…’ 

No it isn’t.  It is politicians responding to the weekly headlines and the volumes of submissions and representations from devastated constituents.  Many victims have been left destitute with no prospects of recovering financially or emotionally.

Banks have immense resources and power, using these unconscionably to avoid responsibility for their actions to the great detriment of affected customers.

For the industry to adopt the position that banks are ‘victims’ when politicians make accurate representations in relation to their systemic unconscionable and criminal misconduct only reinforces the need to have a significant, robust inquiry into the sector such as a Commission of Inquiry.

‘Banks are the biggest tax payers in the country…’

Paying a lot of tax does not excuse systemic unconscionable and criminal misconduct that severely impacts victims.

‘It would ‘distract bank management’ from their core roles…’ 

It could be argued that enforcing speed limits ‘distracts’ speeding drivers.  It also stops the undesirable driving behaviour.

‘It would reduce the amount of money available in our economy, necessary for development…’

The bank’s don’t detail why this would be the case in this thinly-veiled threat.

Availability of money for development of our economy is critical.  However it is not relevant to the debate for a Royal Commission or Commission of Inquiry.

If the outcome of exposing the extent and root cause of banking misconduct is less available capital, the government will need to address that and look to alternative avenues to provide necessary finance, delivered through ethical channels.

The banks continue to hold us to ransom with this argument, which allows them to continue with systemic criminal and unconscionable misconduct unabated.

‘A Royal Commission or Commission of Inquiry won’t award a single dollar of compensation to anyone…’

There is nil prospect of most victims being awarded compensation by any other means at present.  The ‘can is simply being kicked down the road.’  However, a truly independent forensic review by a Royal Commission or Commission of Inquiry of multiple scandals is a more thorough and robust investigative process which removes control of evidence from the banks, is likely to lead to public pressure on banks to remediate the victims when the misconduct is fully exposed.

Once the misconduct has been forensically confirmed and publicly exposed, banks will be forced into a position to compensate customers by regulators who have not acted adequately to date.

‘It would damage Australia’s economic reputation  in this uncertain global economic environment…It would send the wrong signals to overseas investors, who we rely upon for wholesale funding…’

The logic of this argument is a little unclear.  Is the industry talking about the extent of misconduct that would be exposed to the international community?  If the banks are so worried about the impact of the conduct being exposed, why do they engage in the conduct in the first place.

Failure to accept full responsibility for actions is one of the key cultural problems of the banking sector.

Banks are also suggesting that they will be ruined if government 'dare' look into the industry.  A classic example of the 'chicken little strategy': touch us and the sky will fall in.

Conclusion

When the banking industry’s arguments against a Royal Commission or Commission of Inquiry are broken down and analysed rationally, the logic does nothing except expose a highly emotive, fear-based industry-serving narrative.

That only leads one to question.   If the banking sector is really genuine about industry reform, why does it continue to engage in strategies and tactics that are collectively consistent with the conduct and culture that have led to the current serious problem?