Vol 15 (2018) - Issue 4

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Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and its Impact on Corporate Rescue

Synopsis

Australia’s ongoing Royal Commission into the Banking, Superannuation and Financial Services Industry has attracted widespread interest and attention, and has exposed the industry to intense public scrutiny. The Royal Commission will result in significant regulatory reform and is likely to have a lasting impact on the Australian economy.
The Royal Commission will release a final report in February 2019. It is expected that the report will make recommendations to the Federal Government dealing with issues of malpractice, misconduct and cultural issues in the banking, superannuation and financial services industry.
In this article, we examine the major issues arising out of the Royal Commission to date and identify some of the key considerations and potential outcomes for restructuring professionals.

Introduction and background

Since the time that the global financial crisis reached Australia (December 2008), an increasingly intensive level of scrutiny has been directed toward Australian financial service providers, culminating in a staggering 73 Senate, Parliamentary and other inquiries.
The majority of these inquiries have been focussed on consumer protection, institutional misconduct and opportunities for structural reform across the financial services sector.
While these inquiries addressed, in part, the ongoing concerns expressed about misconduct in the financial institutions sector, they ultimately proved to be inadequate to quell the critics and stave off the political momentum for a deeper systemic review of the industry and its participants. Ultimately, after initially opposing an enquiry, it was the boards and CEO’s of the four major Australian banks that petitioned the Federal Government to establish an enquiry to bring the issues to a head, once and for all.
On 14 December 2017, the Governor-General of the Commonwealth of Australia appointed former High Court of Australia Justice, the Honourable Kenneth Hayne AC QC, to inquire into and report on misconduct in the banking, superannuation and financial services industry.
The result is the officially-named Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry ('Royal Commission'). The Royal Commission will deliver an interim report on 30 September 2018 and a final report on 1 February 2019.