Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
Name	Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
Type	Royal commission
Commissioner	Kenneth Hayne
Established	2017
Dissolved	2019
Jurisdiction	Australia
Report	Final Report (2019)

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was a high‑profile public inquiry led by Commissioner Kenneth Hayne that examined conduct across Australian banking, superannuation, and financial services sectors between 2017 and 2019. The inquiry probed practices at major institutions including Commonwealth Bank of Australia, Westpac, National Australia Bank, Australia and New Zealand Banking Group, AMP Limited, and Suncorp Group, and produced a comprehensive final report that influenced legislation in the Parliament of Australia and regulatory action by the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority.

Background and establishment

The commission was established amid public controversy following scandals involving financial advice failures at AMP Limited, improper fee arrangements at Commonwealth Bank of Australia, and misconduct allegations at Hawking, which followed prior inquiries such as the Cole Royal Commission and debates in the Parliament of Australia about corporate governance and regulatory reform. Prime Minister Malcolm Turnbull announced the commission in late 2017 after pressure from opposition leader Bill Shorten and advocacy by consumer groups like the Australian Securities and Investments Commission Consumers’ Advocacy Panel and unions including the Australian Council of Trade Unions. The instrument constituting the commission was issued by Governor‑General of Australia Sir Peter Cosgrove on the advice of the Prime Minister of Australia.

Terms of reference and scope

The terms of reference tasked Commissioner Kenneth Hayne to examine misconduct in relation to banking institutions, financial advisers, credit providers, superannuation trustees, and the performance of regulators such as Australian Securities and Investments Commission and Australian Prudential Regulation Authority. The scope included whether laws such as the Corporations Act 2001 (Cth), Australian Securities and Investments Commission Act 2001, and regulation of financial advice were adequate, and whether misconduct had contributed to breaches of duty at firms including Commonwealth Bank of Australia, Westpac, AMP Limited, National Australia Bank, and Australia and New Zealand Banking Group. The commission could compel testimony under the Royal Commissions Act 1902 and accept submissions from bodies such as the Business Council of Australia, Financial Services Council (Australia), consumer groups like Choice (consumer organisation), and industry regulators.

Investigation and hearings

Hearings were conducted in public across Australian capitals including Sydney, Melbourne, Brisbane, Adelaide, and Perth, with case studies focusing on entities such as AMP Limited, Commonwealth Bank of Australia, Westpac, National Australia Bank, and Australia and New Zealand Banking Group. Witnesses included executives like Craig Meller (AMP), Ian Narev (Commonwealth Bank), Brian Hartzer (Westpac), and regulators including Glen Stevens and John Price, and legal figures such as Christopher Joye and representatives from Herbert Smith Freehills. The commission used compulsory orders and cross‑examination to investigate fee‑for‑no‑service arrangements, alleged misconduct in financial advice networks, insurance claim denials at entities such as TAL Insurance, and governance failures at superannuation funds including AustralianSuper and REST Superannuation Fund.

Findings and recommendations

The final report, delivered in 2019, found pervasive misconduct including fee‑for‑no‑service practices, charging deceased clients, inappropriate financial advice, and conflicts of interest at major firms such as AMP Limited, Commonwealth Bank of Australia, Westpac, National Australia Bank, and Australia and New Zealand Banking Group. Commissioner Kenneth Hayne made over 50 recommendations addressing statutory duties, enforcement powers for Australian Securities and Investments Commission, criminal penalties, and structural reforms including a proposed new statutory duty for financial services, reforms to financial advice law under the Corporations Act 2001 (Cth), changes to superannuation trustee obligations, and enhancements to the Australian Prudential Regulation Authority and Australian Securities and Investments Commission enforcement regimes.

Responses and reforms

The report prompted immediate responses from political leaders including Prime Minister Scott Morrison and opposition figures such as Bill Shorten, and led to legislative proposals considered by the Parliament of Australia and inquiry by the Senate of Australia. Major institutions including AMP Limited, Commonwealth Bank of Australia, Westpac, and National Australia Bank announced remediation programs, compensation schemes, and executive changes involving figures such as Craig Meller and Ian Narev. Regulators Australian Securities and Investments Commission and Australian Prudential Regulation Authority adopted stronger enforcement stances, while industry bodies like the Financial Services Council (Australia) and Australian Bankers' Association revised codes of conduct and compliance frameworks.

Impact and legacy

The commission reshaped Australian corporate governance and financial regulation by accelerating reform of financial advice law, prompting increased enforcement by Australian Securities and Investments Commission, and influencing conduct standards at firms such as Commonwealth Bank of Australia, AMP Limited, and Westpac. It stimulated academic and policy debate at institutions including the University of Melbourne, Australian National University, and think tanks like the Grattan Institute on regulation, compensation, and consumer protection, and left a lasting effect on public trust toward major firms and institutions including AustralianSuper and REST Superannuation Fund. The commission's recommendations continue to inform legislative and regulatory changes debated in the Parliament of Australia and implemented by agencies including Australian Securities and Investments Commission and Australian Prudential Regulation Authority.

Category:Australian royal commissions