Australia will hold a royal commission inquiry into its banking and financial sector, the government has announced.Prime Minister Malcolm Turnbull said the commission – Australia’s highest form of public inquiry – would help restore confidence in the sector. Australian banks have been embroiled in scandals in recent times.The announcement came soon after the four biggest banks called for an inquiry in a joint letter, reversing their previous opposition.”The only way we can give all Australians a greater degree of assurance is a royal commission into misconduct into the financial services industry,” Mr Turnbull said.Australian bank accused over laundering
‘There is no mercy. They don’t care’
He said the “regrettable but necessary” decision would also help the nation’s economy by restoring confidence.Mr Turnbull had previously ruled out an inquiry amid pressure from opposition parties and members of his own government.The royal commission will cover the entire financial industry, including superannuation providers, insurers and financial advisers.The year-long inquiry will cost A$75m (£42m; $56m) and hand down findings in February 2019, the government said.Recent scandalsAustralian banks have faced various allegations of misconduct in recent years, including over financial planning, rate-rigging and insurance fraud.Australia’s big rate-rigging scandalIn August, the nation’s largest lender, Commonwealth Bank, was accused of “serious and systemic” breaches of anti-money laundering laws.
Earlier on Thursday, the heads of the four largest banks – Commonwealth Bank, NAB, ANZ and Westpac – co-signed a letter in which they reversed their long-held opposition to an inquiry.”Our banks have consistently argued the view that further inquiries into the sector, including a royal commission, are unwarranted,” the letter said.”However, it is now in the national interest for the political uncertainty to end.” They reiterated acknowledgements that they had “made mistakes”, but did not detail them in the letter.Mr Turnbull said the inquiry would examine responses to misconduct scandals and whether institutions had governance or culture problems.He described banks as the “bedrock of the economy”, representing more than a third of Australia’s stock market value.Will Australia’s ‘miracle economy’ keep on winning?’Dragged kicking and screaming’Some supporters of the inquiry, including members of Mr Turnbull’s government, said the announcement should have come sooner.Government MP George Christensen said the prime minister had been “dragged kicking and screaming to this decision”.Leader of the Opposition Bill Shorten accused Mr Turnbull of letting “the rorts and rip-offs continue for more than 18 months”.Mr Turnbull said the government had forced bank chiefs to appear regularly before parliamentary committees.It had also conducted smaller reviews, increased regulatory powers and imposed a A$6.2bn levy on the biggest banks.In a description aimed at international markets, the government stressed that Australia’s banks remained “unquestionably strong” in the current regulatory environment.The inquiry has the approval of the central Reserve Bank of Australia and industry regulators.
Source: BBC News