Dr John Hewson is a former leader of the Liberal Party and Chair in the Crawford School Tax and Transfer Policy Institute.
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A fundamental change in banking culture is needed if the Royal Commission’s recommendations are to have any long-term effect, Crawford’s Dr John Hewson AM says.
The Banking Royal Commission handed down its findings on Monday. The report made 76 recommendations on how to fix the problems highlighted by the process and was critical of the behaviour of the banks themselves and bank executives.
But Dr Hewson, Chair of the Tax and Transfer Policy Institute at Crawford School, says that ultimately the Commission’s report may do little to fix the underlying problems in the banking sector.
“While the Royal Commission may shake up the banking sector for a while, seeing the termination of extreme abuses and other bad behaviour, perhaps with some significant civil and criminal penalties, it may do little to change the basic bank ‘culture’ that has been fundamental to this environment,” he says.
“Bank boards are yet to recognise and accept full ultimate responsibility for setting a culture that focuses on the maximisation of profits and shareholder value at the expense of customers, and other stakeholders. Boards agree the strategy, appoint the CEO to deliver it, approve the related remuneration structures. A fish rots from the head.”
He added that with an election around the corner, the significant changes recommended by the Commission will be a job for the incoming government.
“Both sides of politics are ‘accepting’ of all the recommendations, but this mostly pushes responses beyond the next election, where the final form of any legislative and regulatory changes will be determined through the Parliament.
“Without a fundamental change in bank culture, I suspect a drift back to their ‘old ways’.”