Banks face grilling in bid to head off royal commission

The Australian, September 1, 2016:

Australia’s biggest banks will be hauled before another inquiry into the financial sector as the Turnbull government attempts to head off Labor’s calls for a royal commission.

The government has ordered a “forensic” examination of the banks’ treatment of small business customers, instructing the Australian Small Business and Family Enterprise Ombudsman to use royal commission powers in new hearings aimed at gathering evidence of misconduct.

Following a parliamentary inquiry and calls from government MPs for tougher action, Small Business Minister Michael McCormack has asked the Ombudsman to determine what more needs to be done in response to community concerns. The move comes after the ALP and independent MP Bob Katter yesterday joined forces to renew calls for a royal commission, as a “thorough investigation of the culture and practices within the financial services industry” was needed.

Bill Shorten accused Malcolm Turnbull of running a “protection racket” for the banks and singled out Coalition MPs who had previously supported a royal commission into the sector.

“The Prime Minister and his Coalition are running a protection racket to protect the big banks of Australia from the scrutiny and accountability that Australians want to give them,” the Opposition Leader said.

“He is putting Australian banks ahead of the Australians who use them. Or, in other words, you can take Malcolm Turnbull out of the investment bank but you cannot take the investment banker out of Malcolm Turnbull.”

Australian Small Business and Family Enterprise Ombudsman Kate Carnell told The Australian she expected the major banks to appear in hearings, and the inquiry would use the organisation’s royal commission powers.

She said while individual cases investigated in the parliamentary inquiry would also be examined through the hearings, the 12-week inquiry was focused at identifying systemic problems.

“This inquiry is very much about giving advice to the government on changes that really need to happen, and also advice to the banks … to make the system fairer,” she said.

“We will be speaking to the banks and financial institutions and the ABA (Australian Banking Association).

“The focus here very definitely is using the powers that we have got to make a real difference for small business.”