The Prime Minister has defended his decision to haul CEOs before the House of Representatives economics committee at least once a year instead of holding a royal commission into the industry.
“When banks decide not to pass on the full extent of an interest rate cut from the Reserve Bank they will know that they’re going to have to explain themselves in the full glare of a public, parliamentary committee room in Canberra,” Turnbull told 3AW radio today.
“Imagine you’re a bank chief executive and you’re making a decision as to how much of an interest rate cut you’re going to pass on and there will be somebody in the room, might just be a little thought in your own mind, saying ‘you know you better get this right because you’re going to have to explain that to a committee of very grumpy members of parliament’.
“There’s a lot of television cameras there and a lot of attention, so you better get it right.”
He insisted the Government can’t dictate to banks what to do, but said the appearances will become a “very important permanent change to the financial calendar”.
“They will be fully accountable for their actions and that will give them cause for reflection, as to, for example whether they will pass on a full extent of an interest rate cut,” he said.
“They will clearly feel under greater pressure to do so.”
Turnbull said the reputational damage to the banks of not turning up to an inquiry hearing would be “gigantic”.
He ruled out holding a royal commission into the sector, like Labor wants.
“What is the royal commission going to inquire into?” he asked.
The Opposition says it has no faith in having bosses appear in front of a Liberal-chaired economics committee.
“It’s a weak response to some of the systemic failures we’ve been seeing across the financial services system over the last five years,” the party’s financial services spokeswoman Katy Gallagher told ABC radio.
“I think it’s certainly a prime minister who has been weakened by an election who knows he has to be seen to be doing something at least, but certainly not anywhere near what we would argue needs to be done.”
Senator Gallagher doubts the yearly appearance by the banks will drive the sort of cultural change which is needed.
Her leader, Bill Shorten describes Turnbull’s proposal as a “joke”.
Senator-elect Derryn Hinch views the move as an attempt to avoid a full-blown banks royal commission.
“It would appear to be a step just to try to avoid what some would see as an inevitable (royal commission),” he said.
Nick Xenophon Team South Australian senator-elect Stirling Griff is in favour of a royal commission.
“So many people have been left financially devastated by financial institution malpractice over the years,” he said.
“I would still absolutely like to see it happen.”
We value local independent journalism. We hope you do too.
InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.