Banking and Financial Services Royal Commission update

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry held its first public hearing today. Although no evidence was taken, we set out below five key points arising from that first hearing.

1. Expect tight timeframes for responding to the Commission

The Commission is itself working to a strict deadline and requests by financial services entities (FSEs) for extensions of time to comply with requests and statutory notices are unlikely to be granted readily. Pointed comments by the Commissioner directed to some major banks that had indicated they were unable to meet a short deadline are indicative of the ‘no-nonsense’ approach FSEs can expect will be taken throughout the course of the Commission.

2. First up: consumer lending

The first round of hearings will focus on inappropriate lending practices to consumers, particularly in relation to home loans, car loans and credit cards. These hearings are likely to commence in early to mid-March 2018 as case studies, with a document outlining the scope of this round of hearings to be published shortly. With 32 notices to produce documents already having been issued, FSEs in the consumer lending space will need to be prepared for a likely further barrage of notices very shortly.

3. Public submissions will play a big role in shaping the focus of the Commission (although not all individual cases will be examined)

The Commission has to date received 385 submissions from members of the public, with 49% relating to banking, 17% relating to superannuation, 6% to general insurance and 6% to life/TPD insurance. Public submissions will both impact the Commission’s areas of inquiry and serve as a cross-check of whether FSEs have given full disclosure of misconduct and other relevant matters to the Commission.

4. FSEs will not be able to hide misconduct behind confidential settlements

With the major banks already publicly indicating that they will waive confidentiality clauses against whistleblowers, the Commission has firmly asserted that any FSE that would seek legal redress against a person volunteering information to the Commission should expect consequences, including close attention to the motives for seeking to prevent the Commission having that information.

5. Submissions from stakeholders will be sought progressively after each case study

Rather than after the conclusion of all hearings. This staggered approach will only add to the need for FSEs wishing to put submissions on particular issues to the Commission to be well-prepared.

Mark Petrucco, Graydon Dowd and Jacob Uljans are presenting a series of breakfast seminars in Sydney and Melbourne this week on The Royal Commission: where to next, if you would like to attend, follow the link below.

Sydney

Melbourne