Australia\u2019s conservative govt cautious in committing to implement the report\u2019s recommendations in advance
\nMonitoring Desk
\nSYDNEY
\nA major shake-up of Australia\u2019s massively profitable banking sector is on the cards as a landmark inquiry into abuses in the financial services industry releases its final report Monday.
\nSweeping legislative and regulatory changes, a crackdown on the bulging pay packets of bankers and even criminal charges against senior executives could be among the recommendations issued by the royal commission.
\nMajor lenders including the country\u2019s \u201cbig four\u201d banks \u2014 among the developed world\u2019s most wealthy \u2014 have been under scrutiny in recent years, amid allegations of dodgy financial advice, life insurance and mortgage fraud.
\nSome unscrupulous brokers were found charging customers long after they were dead.
\nThe wide-ranging inquiry was established in late 2017 to quell public anger over their misbehavior, and a preliminary report released in September slammed the banks\u2019 culture of greed.
\n\u201cI think there will be some substantive changes … around strengthening the regulators and increasing the punishments (for misbehavior),\u201d RMIT University\u2019s Warren Staples said.
\nAustralia\u2019s conservative government has been cautious in committing to implement the report\u2019s recommendations in advance, while the left-leaning opposition Labour Party said it would adopt the suggestions in full.
\nBut with a federal election due by mid-May, the potentially explosive findings and recommendations are broadly expected to be embraced by legislators eager to cash in on the public\u2019s anti-bank sentiments.
\nIn the firing line will be the regulators, viewed as being too soft on corporations, and standards in the home lending, financial planning, insurance and pension sectors.
\nThe commission\u2019s hearings exposed poor behavior by financial houses and executives with rules repeatedly breached, personal gains prioritized over clients\u2019 interests and loans given to customers who could not repay them.
\nThese sectors are expected to be reined in through tighter standards such as increased penalties for misconduct and greater oversight of behavior.
\nThe recommendations could go as far as banning certain types of sales practices and removing underperforming pension funds.
\nRegulators the Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments Commission (ASIC) are tipped to be given more powers to chase wrongdoers, while also being subjected to performance reviews.
\nShares in the major banks have weakened in recent days ahead of the report\u2019s release, but Bell Potter banking analyst TS Lim said investors had priced in any potential bad news.
\n\u201cI think it\u2019s probably going to be a limited response… my belief is that they will increase the fines or penalties for companies that engage in misconduct,\u201d Lim said.
\n\u201cI think there shouldn\u2019t be too many new laws coming in.\u201d
\nWith the royal commission coming a decade after the global financial crisis, where rampant misbehavior by senior banking executives went unchecked and mostly unpunished, Staples said the inquiry needed to go further and clamp down on a key root cause \u2014 performance-based pay.
\n\u201cThese banks have been wildly profitable… and I think a lot of the executives and staff within the banks have probably got used to over-inflated pay,\u201d he said.
\n\u201cIf we don\u2019t tackle that issue of performance-based pay and we then go back to rewarding staff primarily financially for their contribution to overall profitability, then I think there\u2019s an enormous risk that the whole thing will fail.\u201d
\nAnalysts have said possible remuneration recommendations from the report could involve regulating incentives and pay.<\/p>\n","protected":false},"excerpt":{"rendered":"
Australia\u2019s conservative govt cautious in committing to implement the report\u2019s recommendations in advance Monitoring Desk SYDNEY A major shake-up of Australia\u2019s massively profitable banking sector is on the cards as a landmark inquiry into abuses in the financial services industry releases its final report Monday. Sweeping legislative and regulatory changes, a crackdown on the bulging […]<\/p>\n","protected":false},"author":2,"featured_media":49065,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-49052","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\n