Australian banks inquiry delivers 'scathing report'

Sydney — A powerful inquiry into Australia's financial industry has delivered a scathing assessment of the sector's culture, conduct and compliance, treasurer Josh Frydenberg said.

The release of the interim report comes after several months of revelations of systemic wrongdoing across the financial sector, hurting the share prices of some of Australia's biggest companies and prompting several executive resignations.

"Banks and other financial institutions have put profits before people," Frydenberg told reporters in Melbourne. "Greed has been the motive."

Australia's four major banks will face questioning over the report before a parliamentary committee in Canberra in October, according to a tweet from parliament's official account.

The so-called "Big Four" — Commonwealth Bank of Australia, Westpac, Australia and New Zealand Banking Group (ANZ) and National Australia Bank — have come under severe scrutiny during the hearings this year, along with wealth manager AMP.

The three-volume interim report, however, did not include specific recommendations. It will be superseded by a final report to be tabled in February that could recommend major regulatory reform for banks, financial advisers, pension funds and insurers, as well as civil and criminal prosecutions.

Shares in the four largest lenders all traded higher immediately after the report was released, as it did not recommend any imminent legislative fixes.

Frydenberg said the interim report demonstrated a need for the corporate regulator, the Australian Securities and Investment Commission (ASIC), to do more to tackle misconduct in the troubled sector.

"They do need to pursue litigation, to impose the penalties that are available to them, rather than some of these negotiated settlements which have seen the perpetrators of these offences or misconduct get off too lightly," he said.

Reuters