Australia banks admit failings ahead of crunch inquiry report

Roman Schwartz
February 8, 2019

Shares in the big four Australian banks have soared this morning on relief that the banking Royal Commission stopped short of recommending a major industry restructure.

Australia's corporate regulators will also be subjected to a new oversight body.

NIBA is continuing to review other proposals in the Hayne report and will clarify whether a recommendation for mandatory individual financial adviser registration extends to brokers.

He says it's business as usual for the NAB, insisting he's learned from the revelations of misconduct uncovered by the royal commission.

"I feel the way he's describing me is the polar opposite of what I want to be and what I am and the sort of change I am leading inside the company."Mr Henry said: "In his final report, Commissioner Hayne said I seemed unwilling to accept criticism of how the Board had dealt with some of the issues raised by the Commission".

That's a boon for wealth managers AMP Ltd. and IOOF Holdings Ltd., which suffered some of the biggest reputational and share price damage during the inquiry. When misconduct was revealed, it either went unpunished or the consequences did not reflect the seriousness of what had been done, the inquiry found.

Henry and Thorburn responded today in a media release, the chairman saying the bank "welcomed" being challenged by the royal commission.

The institutional impropriety revealed during the past 12 months hurt some of society's most vulnerable customers, highlighted by the case of a blind pensioner being persuaded to guarantee a loan without warning her of the risks.

The big banks, insurers, pension funds and regulators who oversee the financial industry are bracing for a brutal summary of their misdeeds and weaknesses, and a list of tough recommendations including possible criminal charges.

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Weir's counsel Patrick Wheelahan said the trainer did not agree with RV's submissions but wanted a quick end to the inquiry. It's believed it took two and a half hours for the panel to come to their verdict.

Federal Treasurer Josh Frydenberg said the Government had held off pushing brokers into a full fee-for-service model because of concern about pushing lenders back to the banks.

"The price paid by our community has been vast and goes beyond just the financial", Frydenberg said.

"Businesses have been broken, and the emotional stress and personal pain have broken lives".

Among other things, analysts expect the inquiry will recommend tougher enforcement of responsible lending laws, an end to certain conflicted commissions paid to financial advisors, and limits to executive bonuses.

At time of writing, AMP shares were up nearly 8% on Tuesday, Westpac shares were up 4.3%, and Commonwealth Bank of Australia and ANZ shares were up 3.6% and 3.4%. "The Royal Commission recommendations are largely an extension of recent regulatory changes".

He would not be drawn on speculation that NAB consumer bank boss Mike Baird - the former NSW Premier he hired less than two years ago - could replace him.

It then reversed its position amid widespread public and political pressure.

"The report is not as stringent as people might have expected", said Eleanor Creagh, Sydney-based Australian market strategist at Saxo Capital Markets.

The Government will adopt his recommendation to ban new mortgage trailing commissions from July 2020, but has baulked at also scrapping up-front commissions for fear of eroding competition in the mortgage market.

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