The share prices of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB
), Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Group (ASX: WBC) could face more Royal Commission pain.
Why Is The Royal Commission Coming Up Again?
It was around half a year ago that the Hayne Royal Commission into financial services concluded where we heard against a number of misdemeanours by the big banks, the small banks and other financial businesses such as insurance.
But since the surprise Federal Election win by the Liberals & Nationals over Labor, there hasn’t been much news about implementing Commissioner Hayne’s recommendations or punishments for the wrongdoing.
However, that may be about to change this week.
ASIC Legal Action?
According to reporting by the Australian Financial Review, regulator Australian Securities and Investments Commission (ASIC) is going to get to work on dozens of legal cases against financial businesses over the next few months.
ASIC is looking at 13 referrals from the Royal Commission and three times as many case studies with the potential for legal action according to ASIC Deputy Chairman Daniel Crennan.
One of the first cases expected to come before the court is the fees for no service scandal, which is one of the main things that banks are giving customers huge amounts of remediation for.
Government To Implement Recommendations
It has also been reported that the Government plans to introduce a duty for mortgage brokers to act in the best interests of borrowers and target the bonus commissions for sales targets – which could be introduced by the end of the year according to the Australian Financial Review.
The Government will also apparently introduce the rest of the legislation needed to enact Commissioner Hayne’s recommendations.
However, the legislation will be done in a way not to harm the economy according to Treasurer Frydenberg who said: “It will be done in a way that enhances consumer outcomeswith more accountability, transparency and protections, without compromising the flow of credit and competition.”
What Will This Do To Banks?
A lot of what we saw in the Royal Commission should never happen again. And we need the laws to be better and the regulator to enforce them, which hopefully seems to be happening now.
It may mean a bit of short term pain for the banks, but in the long run I think it’s for the best for Australians and the economy as a whole. But it’s yet another reason for why I prefer the reliable businesses in the free report below over the big ASX banks,
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