The long-awaited final report from the finance and banking Royal Commission will be released this afternoon at 4.10 pm (there is a media lock up this afternoon ahead of the release) and while there will be a lot of heat and light and promises from the Morrison government, there will be nothing concrete.
Turning the recommendations and criticisms into meaningful changes will be the responsibility of the post-May election government in Canberra – widely tipped to be the ALP.
Analysts will be watching the report’s recommendations and the proposed responses for their implications for bank lending.
The AMP’s chief economist, Dr. Shane Oliver wrote in a brief note at the weekend “although I suspect it will just go to reinforce the stronger lending standards already driven by APRA.”
APRA, the key regulator in financial services, along with ASIC will be criticised – but whether anything concrete will come from those comments is problematic.
Both regulators have said ‘mea culpa’ and promised to improve, but that can be only assessed much further down the track.
Certainly both – especially ASIC – have done a poor to an appalling job and allowed the banks, the AMP and other groups to get away with all sorts of dodgy behaviours, including illegally charging customers trailing commissions since 2013.
Last week the looming deadline for the handover and release of the report saw the price prices of the big four banks and the AMP come under enormous pressure on the stock market.
Commonwealth Bank shares fell 3.8% last week, NAB shares were also off 3.8%, ANZ shares lost 4.8% while Westpac was the biggest loser, dropping 5.0% (Some of these falls were also driven by fears about the impact of falling house prices).
AMP shares lost 4.2%, IOOF (which could be a very big loser from the report – as big a loser as the AMP) saw its shares slide 4.5%. And shares in Freedom Insurance ended the week on 0.1%, down 30% and in the view of the market, absolutely worthless and the first corporate casualty from the inquiry.
What will be interesting to watch is the commentary about the performance of key executives, CEOs and board chairs and boards at the various banks and wealth managers.
Will there be any recommendations for criminal inquiries and charges against companies or individuals? Certainly, some were recommended by counsel assisting the inquiry.
