Business Banking & finance Banking royal commission

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Hayne verdict LIVE: Banks, insurers referred over potential misconduct

Updated February 4, 2019 — 7:40pm,first published 3:22pm

7.40pm on Feb 4, 2019

Criminal charges and radical changes to super, home lending

Banks face the prospect of criminal charges while the superannuation and home loan sectors are likely to be radically overhauled, write Sarah Danckert, Clancy Yeates and Eryk Bagshaw, wrapping up our coverage of the Hayne royal commission's recommendations.

A slew of banks and insurance companies have also been referred to financial regulators overseeing the sector for civil and criminal breaches relating to their superannuation and insurance businesses.

However, the report stopped short of making any radical changes to responsible lending requirements, which should alleviate concerns about a credit crunch that could worsen the housing market or impact the economy.

We will have more updates at smh.com.au and theage.com.au. Thanks for reading.

7.27pm on Feb 4, 2019

Want a bank reckoning? You may be left disappointed

Those looking for massive structural change in the wake of the Banking Royal Commission, an overhaul of the regulators or a list of heads on sticks will be disappointed, says Adele Ferguson.

7.25pm on Feb 4, 2019

"Bark worse than bite"

Union lables changes as "cosmetic."

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6.46pm on Feb 4, 2019

Hayne refers banks, insurers to authorities over potential misconduct

By Clancy Yeates

Some of the country’s biggest financial institutions have been referred by royal commissioner Kenneth Hayne to regulators for investigation and potential prosecution, over conduct in the superannuation and insurance industries.

The long list of 24 companies facing possible criminal or civil action include Suncorp, ANZ, NAB, CommInsure, Allianz, AMP and ClearView.

6.29pm on Feb 4, 2019

Lost? Here's the commission's final report at a glance

By Shane Wright

"Choices must now be made", said Justice Kenneth Hayne as he referred some of the nation's biggest company names to regulators for possible criminal or civil action for the way they treated their customers.

Home loans, super, financial advice and more - we run through all the key recommendations from Hayne's landmark inquiry.

Commissioner Kenneth Hayne said "grandfathered" commissions to advisers should be banned.Eddie Jim

6.24pm on Feb 4, 2019

System must be more "transparent and accountable"

By Stephen Miles

Industry Super Australia said the Banking Royal Commission had shone a welcome light on serious conflicts within the financial services system.

ISA deputy chief executive, Matt Linden, said that by shining a light on the system’s deeply entrenched problems, the findings could prove the vital catalyst for long overdue reform.

“As a whole, the system must be more transparent and more accountable – it shouldn’t take a Royal Commission for workers to see whether their retirement savings are in safe hands or not," Mr Linden said.

“The onus is now on the Parliament and industry to ensure superannuation works in the best interest of fund members – not that of shareholders or bank executives.”

The Association of Superannuation Funds of Australia chief executive Martin Fahy said the report's proposed reforms amounted to a strengthening of conflicts management and regulatory frameworks that seek to ensure members’ best interests are at the heart of all trustee determinations.

“However, in the course of his forensic inquiry, the Commissioner has identified specific areas for improvement to ensure these standards are better applied in practice. It’s now up to industry and regulators to raise the bar,” said Dr Fahy.

“Reforming the system in this manner will build consumer trust and confidence in a system that is already delivering some exceptional outcomes for Australians."

The Financial Services Council, which represents Australia's retail and wholesale funds management businesses, said the industry needed to on with the task of strengthening the financial services sector for the future "so that we never end up in this situation again.”

Chief executive Sally Loane said financial services is Australia’s largest industry sector, employing 450,000 people and managing almost $3 trillion of consumers’ savings.

“It must be free of misaligned incentives, mismanagement and poor governance, and focused solely on protecting the savings and growing the wealth of all Australians," she said.

“We acknowledge it will take significant time and effort, and cultural change to effect thorough reform."

6.16pm on Feb 4, 2019

They should "hang their heads in shame”, says Bowen

By Eryk Bagshaw

Shadow treasurer Chris Bowen says the sobering report should make the government and the banks “hang their heads in shame”.

Labor will institute a Treasury task force to implement the recommendations.

Clearly, some of this legislation could and should be implemented as a matter of urgency.

If it’s not, we’ll have to wait for an election and all the relevant post-election processes which are inevitable and would lead to delay.”

5.58pm on Feb 4, 2019

No extension of consumer lending protections to small business

The final report of the banking royal commission released on Monday has left lending to small business mainly unchanged, writes small business editor Cara Waters.

There was no extension of consumer credit laws to SMEs however the report did recommend expanding the definition of small business.

“With some exceptions, I generally do not favour altering the rules that govern lending to small and medium enterprises,” Commissioner Kenneth Hayne said in the report.

Commissioner Hayne recommended the responsible lending provisions of the National Consumer Credit Protection Act do not apply to lending for business purposes

5.47pm on Feb 4, 2019

Hayne unleashes on NAB boss and chairman

By Sarah Danckert

The royal commission has slammed National Australia Bank chief executive Andrew Thorburn and its chairman, former Reserve Bank of Australia governor Ken Henry, for not learning the lessons of the past.

In a searing passage in his final report, Commissioner Kenneth Hayne spared no feelings in assessing the evidence of both men in the seventh round of hearings of the commission.

"Overall, my fear – that there may be a wide gap between the public face NAB seeks to show and what it does in practice – remains," he said.

NAB chairman Ken Henry leaving the royal commission hearings in Melbourne late last year. Wayne Taylor

Commissioner Hayne said NAB stood apart from the three other major banks in terms of showing contrition and accepting its role in the bank’s failings.

NAB is one of several banks to be referred for possible criminal charges over its handling of superannuation and financial services customers, particularly in regard to the fees for no service scandal.

5.42pm on Feb 4, 2019

Brokers warn findings will drive up interest rates

By Shane Wright

The Finance Brokers Association is warning the Hayne recommendations could drive up interest rates.

The association's managing director, Peter White, has gone directly to the proposals around mortgage brokers which has also caught the attention of the government.

He said eliminating trail commissions for brokers could ultimately push up the price of loans.

“This could force up-front commissions to rise in order to compensate for reduced revenues to brokerages, which in turn will lift interest rates and make housing affordability more difficult,” he said.

Mr White also criticised the plan to axe up-front commissions as a handout to major banks.

“Commissioner Hayne wants to hand even more power to the big banks and eliminate competition, which is a ridiculous scenario and shows just how out of touch he is when it comes to brokers," he said.

“If a user-pays model was implemented, we know that most borrowers wouldn’t pay, and banks would make more money and standards would drop further."