The chief executives of Commonwealth Bank and ANZ expressed themselves in very different ways but their message to MPs was the same.
There’s no need for a royal commission.
CBA’s Ian Narev bristled at suggestions there might be a need for a wide-ranging review of the banking industry, pointing out that the similarly exhaustive Financial System Inquiry was published less than three years ago.
“What has happened since all that work was done by the Financial System Inquiry which could cause us to reach very different conclusions?” he asked.
ANZ chief Shayne Elliott simply reasoned that it is easier and quicker to tackle problems faced by customers on an issue-by-issue basis.
“If the outcome is to make real change in the industry for the benefit of customers, we think the current approach is better: targeted, shorter reviews which are actually focused on customer outcomes,” Mr Elliott said.
‘We think it is more effective to have narrowly focused, targeted reviews that get things done rather than involving us in a multi-year process with uncertain terms of reference.”
Mr Elliott said reform was occurring – citing the Ramsay Review into dispute resolution and the Carnell Review into small business lending – and said Labor frontbencher Matt Thistlethwaite was being unfair to suggest otherwise.
Nonetheless, Mr Elliott said he would have no problem if the competition watchdog was asked to start monitoring the banking sector on a systemic basis.
Mr Narev and National Australia Bank’s Andrew Thorburn used their second appearances before the review of the big four banks to dismiss the need for additional oversight, but Mr Elliott told the House of Representatives’ economics committee that he had no objection to the Australian Competition and Consumer Commission’s involvement.
“I have no issue with that whatsoever,” Mr Elliott said.
Mr Elliott said that declining net interest margins – the difference between what a bank makes on loans and what it pays to fund them – and customer churn suggested that banking competition is already strong.
Mr Narev was even more explicit in his rejection of a royal commission when he spoke earlier on Tuesday, telling MPs that a royal commission would hit confidence among overseas lenders upon whom Australian banks rely for funds.
Those funds, Mr Narev said, are what banks loan out to “create the economic activity that will create jobs”.
“The message that the convening of a royal commission would send about policymakers over the last decade, regulators over the last decade, bank management and governments over the past decade would not be positive for the industry, would not be positive for strength and would not be positive for the perception of our industry as unquestionably strong,” Mr Narev said.
Mr Thistlethwaite accused banks of hiding behind commissioned reports into scandals such as those at CBA’s CommInsure unit, and told Mr Narev the banks had already damaged the industry themselves.
“You guys have done a pretty good job of destroying confidence in the banking industry over the past decade, haven’t you?” Mr Thistlethwaite asked.