Background In December 2017, after years of opposition, dismissal and resistance by the Federal Coalition Government and the Australian financial sector, a Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was finally appointed under Commissioner Kenneth Hayes The Commission examined the behaviour of the big banks (ANZ, NAB, CBA and Westpac) as well as a range of other organisations involved in the sector (AMP and OOOF being two) The Commission spent a significant proportion of 2018 hearing testimony from a range of witnesses, including those from the financial sector (the banks and financial providers), business lobby groups (Australian Bankers Association), consumer and support organisations, law enforcement agencies (ASIC and APRA) and affected consumers The media reported some extraordinary admissions and findings In the end, however, many commentators expressed disappointment with the final report of the Commission, seeing it as a damp squib The market also apparently perceived the report as weak compared to what was anticipated, with bank stocks rebounding in price and demand for the trading days after the release date of the report The major findings of the Commission were as follows some resulted in promises by the Commonwealth Government to act on the findings and recommendations That ASIC and APRA consider criminal charges against organisations linked to the fees for no service practice (but no organisations were named) That ASIC oversee the superannuation sector That APRA and ASIC be empowered to impose civil penalties for breach of superannuation regulation (along with other modifications) That a national farm debt mediation scheme be established That a last resort compensation scheme for consumers and small business be established That APRA and ASIC enforce via penalty regimes and legal action rather than issue of infringement notices That ASIC and APRA be scrutinised by a regulator oversight body That mortgage brokers be paid a fee levy by customer, not financiers That car dealers be limited in add on financial packages they could sell Questions Note these questions are not the same size Your discussion should focus mainly on questions 4 6 However questions 1 3 are important because they provide background and context to the other three The approximate allocation of marks (out of 100) will be as follows Q1 5 marks Q2 5 marks Q3 20 marks Q4 25 marks Q5 20 marks Q6 25 marks Why was there pressure exerted on the Federal Government to have a Royal Commission What arguments did the Government and Financial Services Sector use to reject the call for a Royal Commission Using one bank or other provider as an example (so you can use either IOOF, NAB or any other provider testifying before the Commission), what governance issues did the Commission investigations and hearings identify for that provider From a governance perspective, how has that provider responded to the Commission findings (not just in words) From an enforcement perspective, what has ASIC and APRA done to address the criticisms raised in the report What (if any) implications do those specific findings have for corporate governance more generally in Australia (When answering this question, consider the Principles of Corporate Governance on the ASX website) Strongly recommended if you can access a copy, either online or hard copy, read Banking Bad by Adele Ferguson, ABC Books It is a very readable account of the culture of greed deeply embedded in these financial institutions and of the high points of the Inquiry There is also a recording (available through the University library, see citation below) of the Four Corners report on the ABC broadcast three years prior to the Commission, and also entitled Banking Bad O'Brien, Kerry, Ferguson, Adele, Bishop, Mark, Blanch, Merv, Blanch, Robyn, Braund, Jan, Swan, Merilyn (2014) Four Corners Banking Bad (Four Corners) Informit, Melbourne (Vic )

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Background: In December 2017, after years of opposition, dismissal and resistance by the Federal Coalition Government and the Australian financial sector, a Royal Commission into

Background: In December 2017, after years of opposition, dismissal and resistance by the Federal Coalition Government and the Australian financial sector, a Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was finally appointed under Commissioner Kenneth Hayes. The Commission examined the behaviour of the big banks (ANZ, NAB, CBA and Westpac) as well as a range of other organisations involved in the sector (AMP and OOOF being two). The Commission spent a significant proportion of 2018 hearing testimony from a range of witnesses, including those from the financial sector (the banks and financial providers), business lobby groups (Australian Bankers Association), consumer and support organisations, law enforcement agencies (ASIC and APRA) and affected consumers. The media reported some extraordinary admissions and findings. In the end, however, many commentators expressed disappointment with the final report of the Commission, seeing it as a damp squib. The market also apparently perceived the report as weak compared to what was anticipated, with bank stocks rebounding in price and demand for the trading days after the release date of the report.

The major findings of the Commission were as follows some resulted in promises by the Commonwealth Government to act on the findings and recommendations:

That ASIC and APRA consider criminal charges against organisations linked to the fees for no service practice (but no organisations were named)
That ASIC oversee the superannuation sector
That APRA and ASIC be empowered to impose civil penalties for breach of superannuation regulation (along with other modifications)
That a national farm debt mediation scheme be established
That a last resort compensation scheme for consumers and small business be established
That APRA and ASIC enforce via penalty regimes and legal action rather than issue of infringement notices
That ASIC and APRA be scrutinised by a regulator-oversight body
That mortgage brokers be paid a fee/levy by customer, not financiers
That car dealers be limited in add-on: financial packages they could sell

Questions: Note: these questions are not the same size. Your discussion should focus mainly on questions 4-6. However questions 1-3 are important because they provide background and context to the other three. The approximate allocation of marks (out of 100) will be as follows.

Q1: 5 marks

Q2: 5 marks

Q3: 20 marks

Q4: 25 marks

Q5: 20 marks

Q6: 25 marks

Why was there pressure exerted on the Federal Government to have a Royal Commission?
What arguments did the Government and Financial Services Sector use to reject the call for a Royal Commission?
Using one bank or other provider as an example (so you can use either IOOF, NAB or any other provider testifying before the Commission), what governance issues did the Commission investigations and hearings identify for that provider?
From a governance perspective, how has that provider responded to the Commission findings (not just in words)?
From an enforcement perspective, what has ASIC and APRA done to address the criticisms raised in the report?
What (if any) implications do those specific findings have for corporate governance more generally in Australia? (When answering this question, consider the Principles of Corporate Governance on the ASX website)

Strongly recommended: if you can access a copy, either online or hard copy, read Banking Bad by Adele Ferguson, ABC Books. It is a very readable account of the culture of greed deeply embedded in these financial institutions and of the high points of the Inquiry. There is also a recording (available through the University library, see citation below) of the Four Corners report on the ABC broadcast three years prior to the Commission, and also entitled Banking Bad.

O'Brien, Kerry, Ferguson, Adele, Bishop, Mark, Blanch, Merv, Blanch, Robyn, Braund, Jan, Swan, Merilyn. (2014). Four Corners: Banking Bad (Four Corners). Informit, Melbourne (Vic.).