Report: Royal Commission of Australia and Its Findings on Banking

This report provides an overview of the Royal Commission of Australia's findings on the banking, insurance, and financial services industry. It identifies key problems such as fraud, misconduct, and accounting scandals within major financial institutions like Wells Fargo, National Australia Bank, and Commonwealth Bank of Australia. The report details the commission's investigations, including the role of APRA and the actions taken against responsible parties, such as fines, terminations, and restructuring of boards. It emphasizes the importance of the commission in maintaining the integrity of the financial sector and suggests that government intervention and support are essential for the long-term sustainability of the banking industry and the overall economy. The report concludes by highlighting the significance of a well-designed investigation strategy to address ethical issues and maintain the stability of the financial sector.

ROYAL COMMISSION OF AUSTRALIA AND ITS FINDINGS

Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Problem Identification and Probable Solution...........................................................................4
2.1 Problem One:.........................................................................................................................4
2.2 Problem Two:.........................................................................................................................4
3.0 Conclusion.................................................................................................................................6
References........................................................................................................................................7
Page 2 of 7

1.0 Introduction
Banking, Insurance and Finance Services industry may be considered to be the backbone of an
economy. The operations of the industry affect the entire economy of a nation to a considerable
extent. One of the primary aims of the Government of a country revolves around smooth and
efficient functioning of these industries for the sustainable growth and development of the
economy of the country (Matthews, 2016). For this purpose, Governments generally set up a
regulatory body that may be primarily held responsible for overseeing the industrial activities,
control the operation by imposing relevant legislation and monitor and follow up the compliance.
The instant report deals with few of such initiatives as undertaken by the relevant regulatory
body in Australia in recent years.
In Australia, a regulatory body called Royal Commission (hereinafter may be referred to as “the
Commission”, or “the regulatory body”, as the case may be) has been set up under the Royal
Commissions Act 1902, the act of Parliament. The Commission is responsible for maintaining
transparency in the operation of banking and financial service sectors within the country
(Royalcommission.gov.au, 2019).
At the very beginning of the study, the researcher provides a brief overview of the Commission
followed by some of the major identification or inquiry made by the regulatory body in recent
years. The report goes on explaining the issues and probable solutions recommended by the
Commission in this regard. Finally, the researcher wraps up the discussion by way of concluding
note.
Page 3 of 7

2.0 Problem Identification and Probable Solution
2.1 Problem One:
Banking Royal Commission (BRC) was established in the year 2017 to inquire into the suspected
fraud and misconduct in the banking and financial service industry in Australia. The Commission
submitted a report to the Government stating that most of the financial institutions in the country
are involved in the manipulative practices including some of the well-known names such as
Wells Fargo and National Australia Bank (NAB) etc. Different banks were implicated on the
ground of accounting scandals relating to interest rate and swap rate, Westpac, ANZ Bank, and
Macquarie Bank were also held responsible for being involved in such scandals. It is needless to
mention that ASIC and other regulatory bodies imposed severe fines on these banks because of
those scandals (Tillett and Coorey, 2019).
Solution:
The Commission has been conducting a public hearing and planning to submit a detailed report
to the Government. In their interim report, all the progress has been documented so far which
establishes the fact that the banks that are involved in the unethical practices have been fined
accordingly. Besides, the regulatory bodies have terminated employee and bank managers who
are involved in such misconduct. A strict policy has enabled the Commission to implement the
benchmark standard within the banking service sector to an extent.
2.2 Problem Two:
Another biggest scandal unearthed by the Commission is related to the Commonwealth Bank of
Australia (CBA). The bank received a highly critical report from Australian Prudential
Page 4 of 7

Regulation Authority (APRA) in which the APRA mentioned that the management including the
Chairman of the bank were involved into the misconduct and accounting scandal (Hutchens,
2019). The corporate governance and organizational culture of CBA severely violated the
standards set by the regulators which put the depositors’ money at stake. The APRA identified
that the oversight of the management was poor and with unclear accountability and insufficient
monitoring mechanism prevailing within the bank (Apra.gov.au, 2019).
Solution:
Based on the finding followed by the investigation by the Commission, it was found that the
Chairman is responsible and she had to leave the organization. The commission took the
initiative to restructure the Board and also started severe proceedings against the Board
(Hutchens, 2019).
Page 5 of 7

3.0 Conclusion
Based on the discussion and analysis performed in the previous sections of the paper, it may be
substantiated that the Commission has been playing a major role in unearthing any scandals that
may have happened in the banking and financial service industries across the nation. Besides, the
regulatory body has been providing support to the Government in terms of controlling and
monitoring the entire banking operation which may be construed to be the backbone of an
economy. Since the banking industry in the country has been facing ethical issues in terms of
dodgy mortgages, incorrect documentation, interest and swap rate rigging etc, the investigation
has become necessary (BBC News, 2019).
Therefore the importance of the Commission cannot be overruled. Finally, it may be concluded
that a well-designed investigation strategy supported by the Government intervention in terms of
physical and infrastructural support will significantly help the Government to maintain the
sustainability of the financial and banking sector of the country and consequently the entire
economy in the long-term in the most efficient manner.
Page 6 of 7

References
Apra.gov.au. (2019). APRA releases CBA Prudential Inquiry Final Report and accepts
Enforceable Undertaking from CBA | APRA. [online] Available at:
https://www.apra.gov.au/media-centre/media-releases/apra-releases-cba-prudential-inquiry-final-
report-accepts-eu [Accessed 7 Feb. 2019].
BBC News. (2019). Why is Australia investigating its banks?. [online] Available at:
https://www.bbc.com/news/world-australia-42983881 [Accessed 7 Feb. 2019].
Hutchens, G. (2019). The biggest banking scandal is that everyone knew – but still did nothing.
[online] the Guardian. Available at:
https://www.theguardian.com/australia-news/2018/nov/24/the-biggest-banking-scandal-is-that-
everyone-knew-but-still-did-nothing [Accessed 7 Feb. 2019].
Matthews, A., (2016). The financial services industry: Whistleblowing and calls for a royal
commission. Precedent (Sydney, NSW), (136), p.35.
Royalcommission.gov.au. (2019). Royal Commissions | Royal Commissions. [online] Available
at: https://www.royalcommission.gov.au [Accessed 7 Feb. 2019].
Tillett, A. and Coorey, P. (2019). Banking royal commission could be extended: Finance
Minister Mathias Cormann. [online] Australian Financial Review. Available at:
https://www.afr.com/news/politics/banking-royal-commission-could-be-extended-finance-
minister-mathias-cormann-20180419-h0yyrp#ixzz5DTfJV3SA [Accessed 7 Feb. 2019].
Page 7 of 7