Banking Royal Commission - what does it mean to you?
Like most things at the moment the Banking Royal Commission seems like it has been hanging around for ages with no one willing to take the lead. The will they, won't they question was finally answered early this week when the government announced they will conduct a Royal Commission into the banking sector.
You may have read about it and seen the headlines and I'm sure you're asking, so what does all this mean and how will it affect me? Let me try and break it down.
In simple terms, the royal commission will investigate if misconduct in the financial services sector has occurred and it will recommend possible solutions to the government that will aim to protect the public.
Effectively the Royal Commission will look into things like, banks giving out dodgy financial advice, questionable spending of people's retirement savings, and other behaviours that generally "falls below community standards and expectations".
Sounds like a good thing! Yes I agree.
It is then up to government to review the findings and decide on what they want to implement and change. A royal commission simply investigates and provides recommendations. It is up to the government to change the laws based on their findings. Starting in February next year former High Court Judge Kenneth Hayne has 12 months to hand down his findings.
This is where things get interesting. It is all well and good to have the royal commission, however the real challenge comes when the government is faced with making the recommended changes. Once lobbyist and other interest groups get involved, these recommendations seem to get watered down and can become a political football. It will be interesting to see what the government does with the findings.
In his announcement, the PM said: "It will cover the nation's banks, big and small, wealth managers, superannuation providers, insurance companies. It will be a comprehensive inquiry."
Our view is, anything that can be introduced to protect the clients or the public from questionable banking and finance practices can only be a good thing. That is provided the commission hears from all stakeholders involved. These include the banks themselves, clients who have been wronged and the various service providers that support the finance services industry. Only then can balance findings be found and recommended. Here's hoping they get it right, as it will cost us about $75m to find out.