Senior Fairfax commentators have been arguing publicly the merits or otherwise of a Royal Commission into CBA’s financial planning track record. Gareth Hutchens has been especially scathing of the Federal Government’s reluctance to press ahead with such a commission:
Remember, CBA customers have lost millions of dollars in total, a Senate inquiry found fraud, and the careers of some of those responsible inside CBA have advanced since the disaster [and still] there won’t be a royal commission into the Commonwealth Bank.
Philip Soos, writing in The Conversation, suggests that frauds like these are universally downplayed as isolated events, perpetrated by “bad apples” in an otherwise trustworthy FIRE (finance, insurance and real estate) sector.
Seemingly to endorse such a view, the head of the Australian Securities and Investments Commission, Greg Medcraft, called Australia a “paradise” for white-collar criminals. Soon after he recanted, claiming he didn’t want the country to become a haven for financial fraudsters. This rephrasing likely followed when Finance Minister Mathias Cormann leaned heavily on Medcraft.
However, ass Soos illustrates, Australia’s economic history shows a rich past littered with a surprisingly large number of control frauds, which government and regulators have done next to nothing to prevent and rarely prosecute. The mounting frauds appear emboldened by deregulation and liberalisation of banking and finance.
Fairfax’s Michael West reckons the problem with corporate regulation in this country is essentially cultural:
It is about people cowed by the big end of town, spooked into inaction. It is about regulation by press release. It is about the appearance of regulation.
West attests that the real cost is still to come, “when there is a downturn and the failure of regulation will cost thousands more Australians their life savings as the big end of town knows their only penalty for bad behaviour is a spot of reputational damage.”