Highly profitable, the four major Australian banks accumulated bad behavior for several years. A survey report calls for a number of reforms.

The royal commission, which had been investigating the bad behavior of Australian banks for eleven months, reported back. It is a 500-page box that identifies 24 cases that can lead to legal action. He is very critical of banking leaders and proposes a series of reforms.

However, this report written under the supervision of a former High Court Judge, Keneth Hayne, does not go so far as to recommend prosecution of those responsible. He relies on the regulator, adding that he bears some of the responsibility.

The Big Four

The Australian financial sector is in the hands of "Big Four", a group of four major banks: Commonwealth Bank, NAB, ANZ and Westpac. Very profitable, however, they have been questioned in recent years several times for having missed some of their obligations.

In 2017, the Commonwealth Bank was singled out for violating money laundering laws. She was negligent or even lenient with customers who were engaged in suspicious transactions.

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The bank has machines in which it is possible to deposit money anonymously and the Australian intelligence service suspects this system to have been used massively by criminal groups. These transactions are worth hundreds of millions of Australian dollars. The bank failed to report them, although it is nevertheless held.

Died but still removed

Institutions are also singled out for charging unjustified fees. The report mentions cases of commissions levied on customers who have been dead for ten years. Banking employees are accused of accepting bribes to make bad loans; for making forced sales of financial products or for giving bad advice to their clients.

As a result of these various cases, the banks have already been forced to part with their business. The Commonwealth Bank sold last November its asset management business to a Japanese bank for 2.5 billion euros. By the end of 2017, ANZ had already had to sell its life insurance business to Switzerland's Zurich Insurance Group for nearly € 2 billion.

The report proposes a series of technical measures to impose more transparency on commissions, to supervise soliciting for retirement or insurance products, or to change mortgage brokerage rules. It calls into question the "remuneration structure", that is to say the granting of big bonuses at the end of the year that are a habit of the sector.

The mea culpa of the banks

Prior to the submission of this report, the banking sector undertook a mea culpa: "Banks know they have broken their obligations to their customers", the Australian Bank Association chief executive, Anna Bligh, said in a statement.

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"Saying sorry and promising not to do it again did not prevent recurrence"replied commission chairman Kenneth Hayne, presenting the results of his consultations.

Australian Treasury Secretary Josh Frydenberg said the report is "Damning". "The banking sector must now change and change for good"he said, adding that the government would follow the commission's recommendations.

Alain Guillemoles

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