Prime Minister Malcolm Turnbull has announced a Royal Commission into the banks and the financial sector.
The move comes soon after the heads of the big four banks wrote an open letter to the Treasury
for the need for a “properly constituted inquiry” to put an end to rampant speculation around the sector.
At a press conference, Turnbull said that while it wasn’t necessary to hold a Commission, conjecture around the industry was harming the economy.
“The speculation about an inquiry cannot go on. It's moving into dangerous territory where some of the proposals being put forward have the potential, seriously, to damage some of our most important institutions,” he said.
He stressed the need to stop the financial industry from being used as a “political football”.
“It may be politically advantageous for some people to do so. But it runs the risk of putting vital economic interests at stake and runs the risk of putting them under threat.”
Turnbull said that the Commission would focus on misconduct in the industry – a “responsible but comprehensive investigation” into how financial institutions have dealt with misconduct in the past and whether this exposes inherent cultural and governance issues.
“This should not be at commission that runs forever, costing many hundreds of millions of dollars,” he said.
The inquiry will examine the big four banks as well as non-majors, wealth managers, superannuation providers and insurers. While the Commission itself will not be able to award compensation to victims of bad behaviour from the banks, it will be able to make recommendations for a scheme to provide said compensation.
The individual who will oversee the Commission has yet to be announced.
More to come.