The #BankingRC shows that ASIC has failed as a corporate regulator, but don't expect any radical reform under the Turnbull Government, writes Dr Binoy Kampmark.
The PUBLIC INTERVENTION by the former Australian Competition and Consumer Commission (ACCC) Chairman, Allan Fels, did smack of a certain degree of self-promoting smugness, but there was little doubt about the veracity of a good deal of what was said.
The Australian Securities and Investments Commission (ASIC) has failed as a regulator within the Australian corporate system, primarily on the issue of banks and their screamingly inappropriate conduct towards customer protection.
Fels asserted, with the contentment of a high servant who has done good work over the decades:
“ASIC is not feared, unlike the ACCC.”
Strip ASIC of any existing powers, is the view of Fels. And give them to the ACCC. That body, boasted Fels, “has a long-running culture of without fear of favour law enforcement”.
The fanciful notion that the banking and financial sector will miraculously deliver up goods for the public is one that has been running with a dogma’s insistence for decades. The moment Australia got onto the red-hot and misguided neoliberal bandwagon, one hostile to centralisation and regulation, bankers and financial managers began their gradual descent into gleeful corruption.
The Financial Services Royal Commission has been the result — a carnival of brutal exposures and dealing by a financial sector that prides itself on rapacity, exorbitant costs and plunder. Each week reveals a more profoundly disturbing bounty, the next attempt to extort a new charge, a novel costing. There is even talk of the commission of crimes, the illegal charging of fees. The latest – and one of colossal effect – is the duplication of charging fees and insurance premiums across superannuation accounts.
Wrote Jessica Irvine in the Sydney Morning Herald:
The most significant structural problem bedevilling our mammoth $2.6 trillion super industry.
The issue is under the microscope this week at the royal commission into misconduct in the finance sector.
Corporations, in truth, have had a swimmingly decent ride in Australian circles, despite Fels' role in the picture as a reforming regulator. (This is a role of which he never tires of reminding his audience.) Central to Fels’ philosophy was the idea that competition, somehow, catalyses consumer protection. Fels, in truth, remains an economic rationalist.
Australia’s corporations, seen as demigods of production and inspiration deserving of tax cuts, have done little in the way of securing consumer protection and everything in the way of creating the image of value. This stands to reason: a good chunk of the Australian market is run by those beasts long in the tooth, characterised by such aged giants as the Commonwealth Bank — an entity famously indifferent to customers it sees as units of exploitation. They are the rent-seekers — the concentrators, rather than the diversifiers, of markets.
The world of the stock share does little in terms of actual wealth, let alone delivering services, but it certainly inspires its proponents to insist that the state retreat and disappear into quiet and obscure oblivion, leaving the corporate mandarins to run the show. Along the way, behaviour, of the oligopolistic sort, has thrived.
Well as he might extol the knight in shining armour credentials of the ACCC, but Fels' views on regulation with teeth are not without inconsistencies — even if he did, ultimately, become an arch defender of consumer protection. He certainly does have the pedigree, showing a dull if convincing streak in the business. He began at the Prices Justification Tribunal, then moved on to the Victorian Prices Commissioner. Lengthy stints at the Trade Practices Commission, renamed the ACCC in 1995, followed.
Appropriate corporate giants have swayed Fels to part with at least some form of principle when the cash incentive presented itself. Uber Technologies, in appointing Fels to its global advisory board on public policy in 2016, gave us the odd spectacle of a former niggling regulator being brought to a company distinctly hostile – and in some ways adept – at bypassing regulation. Call this an act of genius or disingenuousness.
The other philosophy at play with Fels, which does have some value, is the virtue of the small. This rides on the idea embraced by the Greens that the banking system needs to be purposely fragmented, with various services divested. This would entail Westpac, ANZ, NAB and the Commonwealth Bank divesting their wealth management arms. Westpac’s BT Financial Group, AMP and MLC would duly have superannuation, insurance and wealth management functions separated.
Any such steps of bruising and radical reform are unlikely under the Turnbull Government, which continues its pathway to inevitable extinction over the all-toxic embrace of Australia’s corporate culture. Fels reminds us of how digging by the Royal Commission has revealed “deep-seeded and unethical and possibly illegal behaviour”, which has “shocked the whole community". But explaining that to a Government and Prime Minister reluctant to have embraced a royal commission into banking in the first place, suggests the level of estrangement.
As for the ACCC itself, a more limited role is currently preferred.
Came the words of an ACCC spokesperson:
“We began our market study into financial services last year by establishing a permanent team dedicated to competition issues in financial services. We’re comfortable with the role that we have recently been given.”
Expect little on that score.
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