That was banking royal commissioner Kenneth Hayne’s response when he was asked to shake the hand of the treasurer Josh Frydenberg as he handed over his final report, a year ago.
Frydenberg might have felt miffed but the moment illustrated the clear gap between the work Hayne had done – months of public hearings that brought some of Australia’s biggest financial institutions to their knees – and the mammoth task he was setting for the treasurer in the shape of his 76 recommendations.
A year on, Hayne is still short on words outside of the 1,000 pages he handed over that day.
“I decided, as the commission was coming to its end, that I had to leave the report speak for itself and had to allow the political processes to work their way through without my commenting on those processes or seeking to add to or vary what was to be said in the final report,” he says, declining Guardian Australia’s request for an interview to mark the anniversary.
“And that remains my view even now, one year on.”
With the spotlight off courtroom 4A, the political processes Hayne talks about now loom large
Beamed to the nation from courtroom 4A at the commonwealth courts building in Melbourne, Hayne’s hearings shoved crying victims and prevaricating bank executives into the spotlight, creating heroes including counsel assisting, Rowena Orr QC, and villains including senior NAB chief executive Andrew Thorburn, who resigned after copping a roasting in the final report.
The commission transformed dry financial services jargon – fees for no service, non-monetary default – into screaming headlines – charging the dead, kicking farmers off their land even though they’d made every payment.
Billions have been paid out in compensation, and billions more will flow.
But with the spotlight off courtroom 4A, the political processes Hayne talks about now loom large.
There are about 40 pieces of Hayne-related legislation on the Morrison government’s parliamentary agenda this year – somewhere between a quarter and 40% of the total likely load, depending on who you ask.
Some changes have already been made, including ones that were already in the works because of the series of scandals that helped spark the royal commission in the first place.
And some of the Australian banking industry’s biggest critics, including former Nationals senator John “Wacka” Williams, without whom there would probably never have been a royal commission, detect a real change of heart by the sector.
However, hard questions remain: will a government that has already shown itself weak in implementing its policies be willing to push the most controversial of Hayne’s recommendations through into law? And has the banking sector really learned its lesson, or will it revert to its bad old ways?
Yes it has and no it won’t, Anna Bligh says, the head of the Australian Banking Association.
“The royal commission was an excoriating experience, not just for the individuals who appeared before it but for every bank – their documents, their practices, their operations were combed over by the lawyers,” she says.
“You don’t go through something like that without coming out changed at the other end of it.”
But others aren’t so sure. Frydenberg has already abandoned Hayne’s recommendation to ban commissions for mortgage brokers, and last year saw a somewhat quixotic attack by a group of backbenchers on the corporate regulator over responsible lending rules.
But he is confident the bulk of the government response, which he calls “the largest and most comprehensive corporate and financial services law reform package in the three decades since the 1990s”, will be delivered by the end of this year – a deadline he set in August.
The banking industry’s pushback against more rules and regulations has already been “quite robust”, a regulatory source says, adding: “The test is yet to come.”
‘I see the change’
Williams is driving into town – Inverell, in northern New South Wales – when Guardian Australia calls.
For the first time in ages rain has soaked his farm, and he needs petrol to mow a patch of lawn that has sprung back to life.
“When it rains it lifts your spirits,” he says.
His experience of how the banks have dealt with farmers hit by the long drought parching much of the eastern seaboard also has him optimistic.
“I see the change in the banks’ attitude,” he says.
“We’re going through a terrible drought … and a lot of people still contact me when they have problems but I’ve never heard of one farmer being kicked off their farm.”
Williams, who retired from parliament last year after more than a decade as a senator, prosecuted a long series of parliamentary inquiries to secure the change he sees.
Before and during his years of agitation, a royal commission was derided by the industry, Liberal politicians and some of the more captive parts of the financial media, as a crackpot idea that could only do needless damage to Australia’s world-leading banking system.
But the idea something was crook with the banks has long resonated with Nats in the bush who have seen family farms seized even though the mortgage is up to date, and it turned out there was also plenty of anger in the cities over other issues, including financial advice that left people penniless and life insurance that never paid out.
In 2013, one of Williams’ parliamentary inquiries recommended a royal commission into the corporate regulator, but it wasn’t until Labor came on board ahead of the 2016 federal election that the concept of a quasi-judicial investigation into Australia’s financial system really took hold.
While the Senate was on board, in the lower house party discipline held until late 2017, when Nats Llew O’Brien and George Christensen threatened to cross the floor and bring it on.
Hopefully all the dirty linen has been hung out to wash now is clean.
The CEOs of the big four banks knew the delaying game was over. In late November 2017, they wrote a joint letter to then prime minister Malcolm Turnbull, calling for the royal commission they had for so long opposed.
“I don’t think they realised how much they were throwing themselves under the bus when they called for it,” Williams says.
“Hopefully all the dirty linen has been hung out to wash now is clean and hopefully we get decades and decades of cleaner, honest banking and everyone will be the beneficiary of that.”
Many of the problems unearthed by the parliamentary process, and by media coverage largely led by Fairfax Media’s Adele Ferguson, were given a wider airing at the royal commission.
“It gave a huge public profile, in the majority of cases, to matters that were already out there in the public but for a variety of reasons had not got traction or had not generated the sort of reform or changes that were required,” says Peter Kell, a former deputy chairman of the Australian Securities and Investments Commission.
Kell’s own experience illustrates the point: by the time he gave evidence to Hayne – which he did twice – he had already been put through the parliamentary mill several times.
At one hearing, in 2013, Labor senator Doug Cameron even sledged his breathing patterns, complaining about Kell’s rapid and lengthy answers.
The frequent beatings Asic received from politicians over its inaction against the legions of crooks inhabiting our financial system meant that by the time Hayne rolled around, the regulator was able to point to numerous investigations that were (finally) under way.
And despite receiving more criticism from Hayne, regulators are happy with the extra powers and higher penalties that have flowed – as well as a new “why not litigate” attitude enshrined in Asic policy.
Other changes welcomed by Asic include removing a host of exemptions from consumer protection laws enjoyed by insurers, putting in place a last-resort compensation scheme for victims of bad financial advice and forcing companies to vet the prior employment of the financial advisers and mortgage brokers they hire, to stop rogues moving around the industry from job to job.
“Hayne wasn’t, it must be admitted, as transformational as some as hoped,” says Gerard Brody, the chief executive of the Consumer Action Law Centre, which helped provide case studies to the commission.
“It didn’t recommend breaking up the banks, didn’t radically change the regulators and what they’re responsible for.
“The policy of profits before people was there for decades.
“But I would say it has had really substantial positive impacts for individuals and the community and will continue to do so when much of this legislative reform that is happening at the time actually gets passed.
“I reckon we are seeing indications the banking industry is actually changing.”
Asic’s sister agency, the Australian Prudential Regulation Authority, which shares responsibility for oversight of the banking, superannuation and insurance industries, had a worse time of Hayne than the corporate watchdog.
Its deputy chair, Helen Rowell, looked unprepared in the witness stand as she was grilled over the body’s failure to ever take anyone to court.
And while Apra, too, has promised a tougher attitude, its one royal commission-related lawsuit – an attempt to kick executives at financial services group IOOF out of the superannuation industry – ended in complete failure.
Some in the banking industry started lobbying against Hayne’s report, and the broader push towards re-regulating the finance industry, almost immediately after the tome was in Frydenberg’s hands.
Last year, the push coalesced around Westpac, whose then boss, Brian Hartzer, was loud in complaining of the dangers of too much regulation.
A case Asic lost against the bank over responsible lending standards – the “wagyu and shiraz” decision – and the regulator’s decision to appeal the lawsuit also provided Coalition backbenchers with a stick to beat the agency.
“That was the sound of the pendulum swinging back – hard,” one well-placed regulatory source told Guardian Australia at the time.
Bligh pours scorn on the idea that there was any subterranean lobbying.
“I’m not sure what lobbying they’re talking about,” she says, pointing out that the ABA endorsed responsible lending guidance put out by Asic.
“What we’ve said is that with every legislative change it needs to be done thoughtfully, with appropriate consultation to make sure that inadvertent consequences don’t occur.”
She says the ABA supported all but one of the Hayne findings, and that one deals with the definition of a small business.
“Of course we’ll be talking to government – they’ll be seeking the views of industry,” she says.
“I think it would be unfair to say that the industry is resisting these changes.”
Hartzer has since been silenced by a monster lawsuit brought by financial intelligence agency Austrac against Westpac, alleging the bank failed to stop paedophiles sending money to the Phillipines to pay for child exploitation. He and chairman Lindsay Maxsted were forced to resign.
Austrac’s vigorous approach to enforcing anti-money laundering and counter-terror finance laws may have blunted the industry’s anti-regulation message for the time being.
But there is plenty of crunchy stuff still to come down the legislative pipe that sources say is likely to be vigorously opposed by those in the industry who mutiny against Bligh’s positive approach.
These include removing an exemption that allows retailers such as Harvey Norman to sell loans at the till and extending the tough Banking Executive Accountability Regime, which holds bank bosses responsible for breaches of prudential rules, out into the wider financial services industry and making it cover bad conduct by companies.
That is going to be a fundamental test on whether the government is seriousRegulatory source
The latter is “critical”, a senior regulatory source says.
“That is going to be a fundamental test on whether the government is serious on the royal commission recommendations.
“Because that is going to be where people in the finance sector are really going to push back.”
According to Apra’s Rowell, both her agency and Asic “have been working closely with Treasury on its development, given both agencies’ role in overseeing the new regime”.
Apra will be “rolling out a number of policy initiatives to strengthen the prudential framework, backed by intensive supervision and – where necessary – our ‘constructively tough enforcement approach’,” she told a super industry conference on Thursday.
Despite his optimism, Williams is concerned the banking industry might forget the lessons of Hayne.
“This is always the worry,” he says.
“The policy of profits-before-people was there for decades. Now they’ve shown more compassion to their customers – who knows in time, when the boards change, the CEOs change, it may revert back to the old profit-first attitude.”