What you need to know about the Banking Royal Commission
You’ve probably heard a lot about a Banking Royal Commission over the past twelve months - but what exactly is under investigation, how did we get here and what can we expect from this landmark event?
Who, what, when and where?
Officially known as the ‘Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry’, the Banking Royal Commission kicks off today in Melbourne under the watchful eye of former High Court judge, Commissioner Kenneth Hayes.
The proceedings will last for almost 12 months and will include public submissions from a range of people who believe they’ve been shortchanged by Aussie banking, super and broader financial services bodies.
How did we get here?
This is kind of a long story, but basically there have been public calls for a royal commission into banking for a couple of years now. In saying that, things really ramped up in 2017 after a number of stories ran in the media, shedding a light on some shady banking practices, particularly from the big four banks.
One of the biggest stories of last year was when the ABC reported that although interest rates were at an all-time low, household debt was at an all time high and one in four Aussie households were experiencing mortgage stress, leaving them extremely vulnerable to a rate rise.
This caused a lot of people to question how so many Aussies had gotten themselves into such precarious financial positions, including a host of politicians who called on Malcolm Turnbull to announce a royal commission, but at the time the PM resisted.
In a late twist, however, the heads of the big four banks (yep, the guys under the most scrutiny) caved to public pressure and penned a letter to Treasurer, Scott Morrison late in the year indicating that they too, wanted a royal commission.
"Our banks have consistently argued the view that further inquiries into the sector, including a royal commission, are unwarranted," the letter said.
"However, it is now in the national interest for the political uncertainty to end.”
And so, the official royal commission was set up on the 14th of December, 2017.
What can we expect to get out of the BRC?
Employ some big picture thinking when it comes what you should be expecting to come from the Banking Royal Commission.While the terms of reference are pretty broad, the commission is expected to narrow in on the following three key areas:
- Conduct by the banks themselves, including any potential criminal misconduct
- Culture and governance within the banks and whether that contributed to the conduct
- Adequacy of the overall regulatory and legal framework within which they operate
Oh and no, you won’t be able to claim any compensation as a result of these proceedings or the final report.
“The Commission cannot resolve individual disputes. It cannot fix or award compensation or make orders requiring a party to a dispute to take or not to take any action,” the website clarified.
What it means for you?
While you can’t expect any financial winnings to come directly from the royal commission, Aussie banking consumers could see other positive outcomes.
Banks will be doing their best to generate as much good news coverage as possible during the hearings which could mean they offer better rates on your next personal loan or more features on your coming credit card.
Long-term, and as a more direct result of the commission, Aussies can expect to see legislative changes and recommendations that would mean more transparency as a banking consumer
While it is a little hard to say exactly what will change, the commission should be an overall win for the everyday Aussie.
So, when will we get a result?
Erm, it might not be a result, but it looks set to be one hell of a report.
Basically, Hayes will have a cool 12 months to deliberate over the series of hearings and we can expect a final report to be delivered by February 1, 2019.
We’ll get a little bit of a teaser on the 30th of September this year when the interim report is due, but in the meantime, keep your eyes peeled as stories break from the ongoing proceedings and public hearings.
And remember, if you’re a little spooked with some of the stories to come out of the Banking Royal Commission about your banking provider and feel you need to make a switch, you can check out a range of popular bank accounts using Mozo’s comparison tables.