The Big Four (ANZ, CBA, NAB, Westpac) continue making profits in the billions, despite there having been no less than 16 ‘scandals’ and ‘controversies’ involving the Big Four in the past 30 months — and more being exposed by the Royal Commission every day.
Initially government hearings were conducted; a tribunal was mooted, then created — but there was confusion as to whether it was a ‘Big T’ Tribunal or a ‘little t’ tribunal; and finally a Royal Commission was enacted — after years of calls and lobbying.
Over the years (as far back as Tony Abbott) ASIC (the regulator) has been hobbled, gutted and eviscerated — yet, in that time it still found the resources to take The Big Four to court as part of its investigation into the fixing of the Bill Swap Rate (the rate at which banks lend to each other).
Now ASIC’s being blamed for everything the banks have done. Everyone’s questioning where the Big Four’s profits come from, the ethics behind their investment strategies, and how we can get the banks to clean up their act.
Here's a run back through time from 2014.
2014 & 2016
Banking on Shaky Ground — Australia’s big four banks and land grabs and Still Banking on Land Grabs
In 2014 Oxfam released its Banking on Shaky Ground — Australia’s big four banks and land grabs report into how The Big Four have contributed to illegal logging, forced evictions, inadequate compensation, food shortages and child labour by associating with companies in the Asia-Pacific.
At the time, 4ZZZ Reporter Meredith spoke with Shen Narayanasamy (Oxfam’s Economic Justice Policy Adviser) about the dangers of illegal land grabs and corruption.
In 2016 Oxfam followed up with Still Banking on Land Grabs. Unsurprisingly, the banks had changed nothing in those two years. And why would they? Even in the midst of 2018’s Royal Commission, The Big Four continue to make profits in the billions.
2017
After resisting calls for a Banking Royal Commission the Turnbull Government initiated a set of hearings, where, twice a year, the Federal Parliament’s Committee on Economics puts the CEOs of The Big Four in the hot seat and asks them tricky questions. The Turnbull Government stated that the Parliamentary hearings are enough to pull the banks into line. They were not enough, the Government was forced into calling a Royal Commission and in late-April 2018 the Government was forced into acknowledging that it should have called to Royal Commission earlier.
Why? Because the banks did not take those original ‘hearings’ seriously:
1. The Australian Government hires The Big Four
According to statistics pulled from AusTender, over the last five years alone the Federal Government has awarded $4.4 million in contracts to ANZ; $4.5 million to NAB; $30 million to Westpac; and $80 million to the Commonwealth Bank (CBA).
2. Government is helping the banks’ PR
Federal and state governments have helped plug the bank’s brand. In 2014 and 2015 the Department of Foreign Affairs and Trade (DFAT) signed MOUs with Westpac and ANZ to help ‘bank the unbanked’ overseas. DFAT even gave ANZ half a million dollars for ‘financial inclusion in the Solomon Islands’ — in laypersons terms that means paying the bank to recruit more customers.
Also, consumer advocate Choice has criticised banks for paying cash-strapped schools kickbacks in order to flog their products. Under the guise of financial education CBA’s Dollarmites program signs up primary school kids for bank accounts. The school gets a $5 finders fee for each account. Choice says that in 2016 the CBA paid out $2.3 million in kickbacks to schools.
3. The Australian Government is a huge investor in the Big Four
Australia’s Future Fund’s three biggest investments are in the CBA, Westpac and ANZ, with NAB rounding out the top five. The Australian Government has a $2.3 billion dollar bet that the banks will do just fine.
4. There is a revolving door between politicians and the banks
In 2016 both major political parties stopped taking political donations from the banks. (That is after the Coalition took a final $352,000 in funds that year and the ALP cleared $310,000.) But that won’t stop banks from putting money in the pockets of the political elite.
The upper ranks of the banks, and their lobbyists, are littered with former political advisors, party bigwigs and members of government boards.
In 2017 former QLD Premier Anna Bligh took the helm as chief lobbyist for the big banks. According to The Australian, she’s earning something like an estimated half a million dollars a year as head of the Australian Bankers Association. The head of National Australia Bank’s board — Kenneth Henry — was a Special Advisor to Labour Prime Minister Julia Gillard. The private sector regulator ASIC even has bankers sitting on its advisory committees. Board members have cycled to and from the Future Fund through ANZ, Westpac and CBA.
5. Australian banks are above the law
Australia’s Big Four have been embroiled in no less than 16 separate scandals over the last four years. If you believe the media our banks have tried to manipulate the Malaysian currency, defrauded sick people out of potentially live-saving medical insurance payouts and ignored rampant money laundering. But our justice system just can’t seem to find a way to lock up white collar criminals. If the toughest thing elected officials can do is interrupt the schedule of CEOs for a couple of hours twice a year and ask them questions — it’s no surprise the banks aren’t taking any of this seriously.
2018
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
So far, the Royal Commission has made these shocking revelations:
- If you tie people’s pay to spruiking certain products; turns out, they’ll screw clients for bigger bonuses.
- If your checks and balances rely on banks telling you when they break the law; turns out they’ll lie or withhold information.
- If regulators are denied strong laws and adequate resources; turns out, they’ll do a shite job.
Here are the 5 things you need to know about the Banking Royal Commission:
1. After years of denying the need for a Royal Commission, the Turnbull Government has done some deep soul-searching and are speaking out about the need to confront the networks of privilege, impunity and gross inequality underlying the financial system’s bad behaviour… Just kidding! They’re blaming the regulators.
And granted, ASIC isn’t doing itself any favours. Two of the ten members on ASIC’s Financial Advisor Consultative Committee hold their advisor licenses through AMP.
That’s the same AMP that broke the law by charging people for services they never provided. AMP then doctored an independent report multiple times that pointed out that AMP was breaking the law and then AMP failed to self-report to ASIC that they were, well, breaking the law. In response, the AMP CEO has retired.
But when it comes to government propping up the financial industry, it’s a team effort.
In August 2017, the Attorney-General’s office signed a three-year, $2.1 million dollar contract with AMP. Just to spell that out — even the department tasked with providing legal advice to the federal government is contracting AMP.
(Which obviously has nothing to do with AMP’s regular political party donations, which spread across the Liberal Party and Labor totalled $65,000 in 2016-2017- as shown in Australian Electoral Commission records).
2. Government is talking tough — but together Australia’s local, state and federal governments have taken out almost $6 billion in loans with the big four banks.
That’s $1.7 billion in loans currently owed to the Commonwealth Bank: the bank that charges dead people for financial planning.
$2.2 billion to National Australia Bank: whose staff forged signatures and stole client money.
$1.4 billion to Westpac: the leader in “liar loans” that give people huge mortgages they can’t afford.
Half a billion to ANZ: where in 2015, 1 in 20 people seeking financial advice were left worse off.
3. Not only is government paying contracts and loan interest to the banks — it could be directing your cold hard cash their way too.
If you’re a public servant, your default superannuation fund has big bucks invested in the banks: likely making up four of your super fund’s five largest investments in Australian companies. If you have super at all, your savings are almost certainly in bank shares. (Future Super was the only fund we could find that did not have holdings in at least one of the big four). Which the Australian Banking Association point out with their latest slogan: “Australian banks belong to you” which polled better than “when we screw you, you profit!”.
In fact, the bank might even own your super fund.
4. With government, regulators and industry groups failing to stop bad behaviour – some are putting their hope in shareholders to pull financial companies into line
Some AMP shareholders are even threatening not to re-elect company directors. So be warned, if you earn squillions overseeing a company involved in systemic, illegal behaviour – well, you may not lose your job or go to jail or even take a pay cut – but they might not hire you again…
If financial victims are looking for a shareholder with muscle – we can suggest one that may just fit the bill: the Australian government. Australia’s Future Fund has $2.3 billion dollars invested in the banks: making up its four largest company shareholdings. It also hires AMP as an investment manager.
5. If you missed seeing banks in the hot seat during the recent hearings: you better get in quick!
After receiving 4,501 submissions, the Royal Commission has allocated 10 whole days to hearings into the structural problems of Australia’s financial advisory industry. It held 9 days of hearings in March looking at lending practices and will have another round in May focusing on small and medium enterprises.
By comparison, if you had a season membership to the 2014-2015 Royal Commission into the Trade Unions you had bang for buck at 189 days of hearings.
For more information head to the Oxfam website (for their two reports into the investments the Big Four make in overseas jurisdictions); Market Forces website (to find out how money and investments can be used as a force for change); and the Tax Justice Network (for information on making our tax system fairer for all, not just large companies).