Industry Super Australia has backed calls for a Royal Commission into Australian banks, even as other associations and lobby groups rejected the idea.
ISA argued lack of trust in banks after recent scandals and allegations of wrong-doing could shake public confidence in their lines of business in compulsory superannuation.
“Despite this, we have seen the banks consistently seek to design policy to suit their vertically integrated business models, typically at the expense of the Australia public,” ISA said in a statement.
The banks have lobbied to protect sales commission for selling life insurance, change the governance model of not-for-profit super funds, remove protections for those who do not choose their own super funds, it said.
But the Financial Services Council (FSC) said a Royal Commission into the sector would be a waste of time and resources, given the industry has been subject to 14 inquiries into the superannuation, financial advice and life insurance sectors, and the fact that Australia is looking to transition away from the resources economy to a services-driven economy.
“Some of these have led to legislation, increased regulation and better consumer protections and outcomes,” FSC chief executive, Sally Loane said.
“Where poor practices have been identified the financial services industry has led reviews to understand where consumers were affected and put legislation in place to permanently address shortcomings.”
The Australian Bankers’ Association (ABA) has warned a Royal Commission would send “alarm signals” to international investors, particularly during a period of global volatility.
It also echoed the FSC’s stance, arguing that the issues raised by the Labor Party have already been addressed in inquiries, and before Parliament, with new regulations introduced for banks.
“The outcomes of those inquiries are either being implemented or, like the former Government’s Future of Financial Advice reforms, are still taking full effect, ABA chief executive, Steven Münchenberg said.
“These measures respond to instances that occurred in the past and should be given a chance to take full effect before another inquiry is contemplated.”
