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Royal commission: Remember banking in the old days?

The local bank manager was a pillar of the local community. He (and it was a he) would be the financial auditor for local community groups and look out for the needs of elderly widows of deceased customers.

Working at a bank was a desirable career path. Even in the 1980s, many like me went straight from school into a job at a local bank. There was a defined hierarchy within the branch, and reams of written procedures and protocols contained in countless reference binders in the Assistant Manager’s office. Staff were on a set wage, which increased as you progressed along the defined career path. Customers had a savings account, a home mortgage, and perhaps an overdraft account or a personal loan.

And for the young’uns reading along, home mortgage interest rates were pushing 17 per cent in 1988, but at least you could earn over 15 per cent interest on your savings account. But I digress.

Banks were respectable and respected. The staff worked in the interest of the customer and the good name of the bank. You were proud to tell family and friends where you worked.

What changed? The industry changed.

The banking system was deregulated, the Four Pillars policy of the early ‘90s prevented the Big Four banks from merging with each other, but not from snapping up smaller banks and building societies. The government-owned Commonwealth Bank was fully privatised in 1996 because governments were not meant to own businesses. Banks diversified into higher return products, dabbled in the financial planning market, and pursued automation.

The drive for automation and cost-reduction meant banks pushed customers to use ATMs, then decrease staff numbers.

Remaining staff roles in a branch became commission-based, tellers became sellers, and Key Performance Indicators (KPIs), which by their nature are skewed towards measuring numbers rather than customer satisfaction, infiltrated the system.

Stakeholder value began to override the personal relationship with the customer.

Whilst banks still trade on the image of respectability, behind the facade and slick advertising it is all about shareholder value, market share and profit growth.

This inevitably led to the boundaries of moral and good corporate governance being pushed by financially ambitious staff, backed by executives and boards with the same mindset. The balance was tipped away from the customer, to the poorly-trained commission-based financial advisors, credit card suppliers and sales target-driven home loan lenders.

Engaging in unlawful and morally questionable behaviour encouraged by the corporate machine meant white collar crime was the certain outcome. What else did they think would be the result?

Today the result is the image of the banking industry in tatters, customer tales of personal heartache and financial ruin, and finally a Royal Commission into banking malfeasance.

What should have been a straight-forward enquiry into systemic criminality has become weaponised partisanship. In mid-2015, the Greens (supported by Nationals Senator John Williams) launched a motion in the Senate for a Royal Commission into the Financial Services industry.

The motion was defeated 39-14, only receiving support from the Greens, Senator Williams and a number of cross-bench Senators. No Labor.

Emboldened by the whiff of electoral victory and the fed-up mood of the electorate, Labor has since been leading the Royal Commission campaign. The issue turned into a Big End Of Town versus The Bank Bashers fiasco. When all the public wanted was financial prudence and fair treatment.

John Howard called the Royal Commission “rank socialism”. (What that has to do with not being ripped off by a dodgy financial advisor is anyone’s guess.) Treasurer Scott Morrison labelled it “crass populism”. Bill Shorten said nothing less than a Royal Commission into the industry would suffice. Minister for Revenue and Financial Services (and ex-National Australia Bank executive) Kelly O’Dwyer denounced a Royal Commission as “talk-fest”.

The Union movement wondered when the Federal Police raids of bank offices will start, as occurred during the Royal Commission into Union governance and corruption.

The Big Four Banks sent a letter to Treasurer Morrison on November 30, 2017, calling for an end to “political uncertainty” and for a Royal Commission to take place. Ex-Goldman Sachs investment bank partner Prime Minister Malcolm Turnbull finally conceded to the Commission – one “he does not relish” yet the decision was made “in the national interest”.

He sounded like he wanted the public to be grateful that he and his cohort of responsible ministers were dragged kicking and screaming to this concession – and I’m not having that. Especially when coached around that self-serving term “national interest”.

The Australian public also has a right to be incredulous at Treasurer Morrison. He is willing to pander to the bankers who can afford a $1000-a-plate seat at the table, dismiss the Royal Commission as crass populism, yet describe his performance as treasurer as constantly working to advance the national interest. And now he acts like the Royal Commission was a great idea of his.

Kelly O’Dwyer scores a F grade for having ex-employer National Australia Bank sponsor her glitzy campaign fundraising event at Crown Casino in 2016. Her unapologetic, evasive, hubris infused interview on ABC-TV’s “Insiders” last week was pure contempt for the intelligence of the public.

Treasurer Morrison repeatedly said the Royal Commission would erode confidence in our “robust” banking system. I would reverse this and ask: “Why does such a ‘robust’ system rely so much on confidence rather than prudent and lawful performance? Aren’t the Australian public entitled to confidence in the competence of the relevant government ministers and the financial system regulators?’

The initial revelations at the Royal Commission of charging fees to dead people, charging fees for no service, and falsifying documents to the regulator are no surprise to anyone who hasn’t attended a party fundraiser. And remember, these are acts carried out by loud and proud members of the Business Council of Australia, who are also vocal supporters of business tax cuts.

Australia needs banks, and the public should be able to trust the banks. My bank calling me one minute to say my credit card is over the limit, then sending me a letter offering me a pre-approved limit increase the next day is not an ideal method of gaining my trust.

The behaviour won’t change until the profit above people culture changes.

And how about a publicly owned bank? If a splinter group of the Coalition MPs want to re-nationalise a coal fired power station, why not a bank? I’d avoid the name Commonwealth Bank though, that name doesn’t have the cachet it used too.