Financial services could come under more scrutiny if Labor is elected this year.
Industry Super Australia (ISA) has announced it supports Labor’s intention to hold a royal commission into misconduct in the banking and financial services sectors if it wins the next federal election, as the government continued to defend the industry against further scrutiny.
"Many Australians have suffered through the decisions of banks and financial institutions," Opposition Leader Bill Shorten told reporters at a press conference in Melbourne on Friday. “Enough is enough.”
In a statement released to media later in the day, Shorten along with Shadow Treasurer Chris Bowen and Shadow Financial Services Minister Jim Chalmers said the decision to call for a royal commission was “not taken lightly – it’s been made after careful consideration over an extended period of time.”
“The fact is, confidence and trust in the financial services industry has taken a huge hit over an ongoing range of scandals and high profile consumer rip-offs,” the statement said.
Responding to the announcement, ISA said Labor’s call for a royal commission into the major banks and their vertically integrated businesses was justified.
“Industry Super Australia is increasingly concerned that the lack of community trust and confidence in the scandal-prone banks could infect public confidence in their lines of business in compulsory super,” the group said in a statement.
“Over recent weeks, months and years Australia’s major banks have faced repeated allegations and evidence of wrong-doing that has reduced public confidence in banking and finance.
“Despite this, we have seen the banks consistently seek to design policy to suit their vertically integrated business models, typically at the expense of the Australian public.”
A royal commission would have to consider how broadly and deeply unethical conduct exists in banks’ vertically integrated businesses, including their involvement in managing hundreds of billions of compulsory super savings on behalf of millions of Australians, ISA said.
“Given compulsory super is a central piece of Australia’s long term economic and social policy, on balance the answer may be to structurally separate banks and super,” it said.
The Opposition estimated the cost of a royal commission at $53 million across two years and said it would investigate banks, superannuation funds, insurance companies and credit unions.
However, Treasurer Scott Morrison said there was no need for the royal commission because the sector was already adequately regulated.
"I'm not saying for a second there aren't issues to be addressed – and they are being addressed and we have a tough cop on the beat in this area," he said making reference to the corporate regulator, ASIC.