What is the banking royal commission all about?
28th March, 2018
If you have been following the news in recent months you will have heard about the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry or as it is commonly known the banking royal commission, which was established on 14 December 2017. You may be wondering what it’s all about, so we’ve put together a brief overview for you.
What is a royal commission?
Royal commissions are public inquiries that can be called in Australia by the Commonwealth, State or Territory Government. Each jurisdiction has its own legislation governing royal commissions, for the Commonwealth this is the Royal Commissions Act 1902 (the Act). Section 1A of the Act says that the Crown may call an inquiry, by issuing ‘letters patent’, into any matter ‘which relates to or is connected with the peace, order, and good government of the Commonwealth, or any public purpose or any power of the Commonwealth.’ One of the important characteristics of a royal commission is that it has coercive powers. For example, the commission may summon a person to appear to give evidence or to produce a document and if they fail to attend they may be guilty of an offence carrying a penalty of 2 years’ imprisonment (sections 2 and 3). So, once called, a royal commission has the powers to conduct a very thorough inquiry.
What is the banking royal commission inquiring into?
According to the terms of reference in the letters patent for the banking royal commission the Commissioner, the Honourable Kenneth Hayne AC QC, is required and authorised to inquire into a range of matters relating to banking, superannuation and other financial service providers including:
- Whether there has been misconduct by financial services entities;
- Whether their conduct falls below community standards;
- Whether the use of members’ superannuation funds meets community standards and is in the best interests of members;
- How effective the mechanisms are for consumer redress where there has been misconduct; and
- The adequacy of:
- existing Commonwealth laws and policies;
- the internal systems of financial services entities; and
- industry self-regulation.
The objects of the inquiry, financial service entities, are defined in the letters patent and include authorised deposit-taking institutions (ADIs) or banks, insurers, licensed financial advisers and their licensees and superannuation entities. The definition does not however, include Commonwealth corporations or entities within the meaning of the Public Governance, Performance and Accountability Act 2013 (PGPA).
Want to know more?
The banking royal commission website has comprehensive factual information about the royal commission. It gives you access to the terms of reference for the commission, media releases, background publications, information about public hearings and how to make public submissions. We are sure you will also be seeing plenty of reporting in the media between now and 1 February 2019, when the Commissioner is due to publish his final report.
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