Who would have guessed? The banks have emerged as relative winners from the royal commission’s final report.
Winners, that is, compared with the fear and loathing that surrounded them at the time of the interim report.
Oh yes, there are some untidy details to be cleaned up, some hundreds of millions of dollars in compensation to be expensed, some court cases ahead as ASIC tries to find its teeth, maybe, maybe even a criminal charge for someone.
But that’s small beer compared with what Commissioner Kenneth Hayne did not recommend and what a lot of commentary had feared.
And there are two outright winners for the banks if all the recommendations are implemented.
The obvious one – and perhaps the recommendation least likely to be implemented – is to scrap mortgage brokers’ trailing commissions. That would save the banks many, many millions.
The idea that brokers could easily make up the difference by charging their clients bigger fees or getting larger initial commission from the lenders is somewhat fanciful.
Remember that CBA testimony egged on Commissioner Hayne’s impression that trailing commissions were “money for nothing”. It actually isn’t that simple.
The mortgage broker system is not perfect, but the banks – not customers – will be the winners if the brokers are whacked as Haynes suggests.
The second big win for bankers is less obvious, but more important.
The Hayne royal commission provides an opportunity for our most important institutions to rule off the past few decades during which principle gave way to greed, self-advancement and hubris.
Commissioner Hayne has given bankers the chance to become professionals again, instead of being the spivviest of salespeople.
At their core, our banks are glorified building societies, making the obscene over-payments in the C-suite all the more risible.
No, you don’t have to be a genius to take over running a member of a rich, established, effectively government-guaranteed cartel.
Owning their history, and cleaning out dud and dumb boards and mediocre management, could take bankers back to where they were in the community.
There are other relative wins.
Commissioner Hayne didn’t touch vertical integration – a huge relief for AMP and Westpac, the latter having gambled on this outcome when CBA, ANZ and NAB had already jumped.
And unconscionable lending restrictions have not been extended.
There’s more in the detail, of course, but here’s a big opportunity for the banks – if they’re smart enough to take it.