RADIO INTERVIEW
2HD BREAKFAST/NEWCASTLE
TUESDAY, 5 FEBRUARY 2019
SUBJECTS: Banking Royal Commission findings. Scott Morrison voted 26 times against a Banking Royal Commission
RICHARD KING, HOST: Good morning Pat.
PAT CONROY: Good morning.
KIM BAUER, CO-HOST: Now Pat, we’ve seen Labor’s TV ads; you’re saying in that that Scott Morrison voted again the Royal Commission 26 times. Why do you think the Government didn’t want to have this to start with?
CONROY: Well, I think they didn’t want to have it because they are very close to the banking sector, number one, and secondly the Royal Commission found a lot of negative behaviours, not just on the banks, but also the regulators. I think that’s why Scott Morrison voted against the Royal Commission 26 times. He in fact called it a ‘populist whinge’. If you look at the report, ASIC, which is the regulator for the financial sector, came in for a real caning, and that’s partly because of decisions made by this Government.
KING: Justice Hayne named several leading financial institutions; in fact he singled out the NAB for special mention, including their chair and CEO. I noted that Tony Abbott was on Sydney radio yesterday saying ‘Look there are a few bad boys here, they should be weeded out and punished accordingly, but there’s nothing wrong with the system’. Do you think it is just a bunch of rogue individuals or do you think there is something wrong, that there is a systemic problem?
CONROY: I think there is absolutely a systemic problem and, quite frankly, ‘the few bad apples’ has been used every time cases of financial malfeasance have been found in the banking sector. It is much broader than that and in fact the Royal Commission found that there was a real disconnect between conduct and reward, there were conflicts between duty to customers and self-interest; a whole lot of other bad behaviour. I don’t think anything will change until we alter the system significantly and, quite frankly, ASIC, when they find a criminal breach, instead of their automatic response being to negotiate a settlement, they should be prosecuting banks and in fact laying criminal charges where it makes sense. And where someone has broken the law they should go to jail. That’s the only way bankers will learn.
BAUER: And most of Australia is saying ‘hang these people out to dry because we’ve been taken for a ride’, but, Pat, when all of this is done, and let’s presume whichever party is in government implements all these changes, we customers, what is it going to mean to us? How much better off are we going to be when these changes are in?
CONROY: I think very significantly better off. For example, if you are lucky enough to have a bank branch open near you, when you go in to see a teller you are not going to have them try to upsell you products, whether it’s insurance or superannuation. When you see a financial planner, when you see your bank manager, you can have confidence they are actually acting in your best interests not short-term profit incentives for their employer. And I think we will see a real cultural change. We’ve got to do this properly. We’ve got one of the most concentrated bank sectors in the entire world. The top five banks in Australia, so the top four and Macquarie Bank, own about 80% of the market. In the United States and the UK it is about 30%. So we have a very concentrated market. We need to blow it open a bit and that will improve customer service and competition.
KING: We have now two regulators, ASIC and APRA; the Royal Commission was highly critical of both of them and, in fact, he has recommended we have a third party to oversee the two regulators to make sure they are doing the right thing. From my reading it appears that if all the recommendations are implemented we are going to have to create a giant bureaucracy. Do you think that taxpayers are going to be happy to wear the bill for all that, Pat?
CONROY: I think they are, if they see real change in the sector. I was on the House of Representatives Economics Committee for four years and we would have evidence from ASIC and APRA every six months talking about what they’re doing. And their attitude was shocking. ASIC, for example, as I said, their first instinct was to negotiate with the banks not prosecute them, and that was partly started by a government that cut $150 million from them and instructed them to apply light touch self-regulation. I think people are prepared to pay for proper regulators as long as they actually see that change in behaviour, forcing banks and other financial institutions to actually act in the interests of their customers and not their CEO and executives. And I think that’s the real test for all this.
KING: Well, we’ll keep our fingers crossed and wait with bated breath. Thanks for having a chat with us this morning.
CONROY: Not a problem, have a great morning.