The Hayne Royal Commission and Trust Issues in the Regulation of the Australian Financial Sector

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The issue of how trustworthy Australia’s financial institutions, especially its banks are, has been an increasingly controversial issue in recent years as a succession of financial scandals engulfed many of the financial sector’s most significant players. A recurring theme in debates about Australia’s financial sector has been concern about weak enforcement of existing laws and regulation. Criticism has been directed at all of Australia’s financial regulators, but especially the market conduct regulator, the Australian Securities and Investments Commission (ASIC). After spending years resisting intense pressure from many segments of the community, (including some of its own backbenchers), to establish a royal commission of inquiry to investigate misconduct in Australia’s financial sector, the conservative Commonwealth Coalition Government finally capitulated in late November 2017. Retired former High Court Judge Kenneth Hayne was appointed to investigate misconduct in Australia’s banking, superannuation and insurance industries. As 2018 has progressed a series of public hearings has revealed an appalling picture of systemic abuse and misconduct by both small and large scale Australian financial institutions. A key question has been what were the regulators, especially ASIC doing, or not doing? This paper discusses the Hayne Royal Commission, especially in relation to Australian regulatory (in)activity. Also, the paper reports on the findings of the 2018 Deloitte National Survey on Trust in Banking regarding the views of Australians on how well banks are held accountable by regulators in Australia.