(pictured: Steven Munchenberg)
Steven Munchenberg, well-connected lobbyist and chief executive of the Australian Bankers Association, is not worried about Kate Carnell’s recently announced review into banking for small business. But continued talk of a royal commission into banking is a worry.
He participated in a webinar last week organised by Stewart Oldfield of Field Research, a former broker and journalist. Munchenberg said he had known Kate Carnell, a former chief minister of the ACT, for many years and expected her inquiry, as Small Business and Family Enterprise Ombudsman, would result in “something tangible” for the banking industry.
A royal commission would be something altogether different. Munchenberg said he did not believe that there would be a royal commission. However, he added a couple of caveats to his prediction. They were if there was “another major revelation” of bank bad practice – that is, another scandal involving a bank ripping off its customers – or if something completely out of the banks’ control, such as a change of leadership in the Government, were to occur. Munchenberg believes both are unlikely.
He said there were three key issues which had driven where the banks find themselves today. They were:
- Too many examples of poor conduct. “Undoubtedly there are issues,” he said. “We don’t argue it’s not a problem. But we want to get on and fix those problems through our program of reforms commenced early this year.”
- The worldwide reaction by sections of society railing against big institutions, such as banks, as seen with anti-globalisation, Brexit and the US presidential elections, and
- Political intensity from the Federal Opposition which sees one of the Prime Minister’s weaknesses as being due to a “privileged background” and a “mate of the banks”.
The Government under its current leadership, was adamant that a royal commission was a bad idea, he said. From the ABA’s point of view, the short-term concerns were that such an inquiry would be “highly distracting” for the banks and leading to uncertainty in the broader financial services world. Longer term, a royal commission might negatively impact the perception of risk in the Australian market by foreign institutions and investors.
He said the banking sector needed to be assertive about what was the right thing to be done and the important role that the banking system played in the economy.
With the Carnell small business inquiry, Munchenberg said the concern was that any recommendations might lead to a higher cost for small business borrowers as the banks reacted to perhaps-higher hurdles in meeting their small business lending targets.