Magazine of Socialist Action in Australia

Royal Commission hits banks with feather duster

The final report from the Banking Royal Commission was released in early February. The year-long inquiry exposed widespread criminal activity within Australia’s banks and financial institutions.

The report indicated that the root cause of the problems was the profit-driven motive of the sector, but absolutely nothing was recommended to address this.

Submissions to the Commission gave just a taste of the corruption that exists. Amongst other things, it was revealed that bank customers were being charged for services they never received, that dead people were being charged fees, and that thousands of people were given dodgy financial advice.

Widespread bonus systems were in place that rewarded staff for ripping people off. The Australian Securities and Investments Commission – supposedly the regulator – knew about most of this but essentially turned a blind eye.

The report made 76 modest recommendations, most of which both the major parties have agreed to implement in some way over time. But even if implemented in full, these changes are cosmetic and will not stop the banks putting profits before their customer’s needs.

The banks are in the process of paying out $850 million in compensation to some of those they ripped off, but this is just a tiny dent on their billions in profits.

While some cases were referred to authorities for further investigation, it is highly unlikely that any banker will see the inside of a jail cell. At best, a few executives may be forced to move on from their cushy positions, a few token fines might have to be paid.

In fact, so weak were the Commission’s recommendations that the banks’ share prices rallied after the report was released!

If anything, the Banking Royal Commission highlights the absolute hypocrisy of capitalism. While thousands of people are currently locked up for committing petty economic crimes, those who have stolen millions are hit with a feather duster.

The only way to deal with the corruption and exploitative practices of the banks is to remove the profit motive entirely. That could be done by bringing the banks and major financial institutions into public ownership and running them on a democratic basis. In this way people’s needs rather than profits could be put first.

By Socialist Party reporters