Billions of dollars returned to customers.Thousands of pages of new laws.Reams of court cases chastening wrong-doing.
In the five years since the final report of the banking royal commission, a lot has happened.
But banks, regulators and advocates say there's plenty more to be done to protect consumers — and to fix some of the unintended consequences of change.
Bank 'improvement'
The deputy chair of corporate watchdog ASIC, Sarah Court, says there's been a broad improvement in the way large financial institutions engage with their customers and recognise issues raised by them.
"We've seen a change in culture, and a change in the way that banks treat their customers," she said.
That's the good news.
The bad is that the Australian Securities and Investments Commissionstill regularly deals with what she calls conduct "not that dissimilar from some of the things we saw during the royal commission".
"I think we still see widespread issues — failures of legacy systems, IT systems not speaking to each other — and things that really reflect a lack of investment by large financial institutions, which continue to impact customers," she says.
This includes dual fees being charged on accounts,cases where consumers are "being charged with things that they shouldn't be charged for" and issues needing remediation — repayments by financial institutions to their customers for these kinds of errors.
"What is critical that we maintain, going forward, is that those lessons of the royal commission are not lost."
Things are better
Karen Cox has been helping people with money problems for decades.
She's the chief executive of the Financial Rights Legal Centre, acommunity legal centre that helps people in financial stress and advocates to fix problems and products that get people into trouble.
Ms Cox was the first of more than 100 witnesses to step before the commissioner and his team. And she's pleased with what she's seen happen since.
"I think the royal commission has largely been good. I think the legal landscape now is better, people have more rights. We have better laws."
Banks have become more receptive to complaints, regulators have taken more substantial court actions — deterring others from bad behaviour — and new laws have enacted a 'compensation scheme of last resort' that protects customers of failed financial firms.
A new agency, the Australian Financial Complaints Authority (AFCA) is an avenue consumers can take for complaints below $2.5 million.
"It has a far greater remit than (the existing body) ever had. Its jurisdiction is larger, the amounts it can award are larger, but its approach I think, is quite different," she says. "In the wake of the royal commission, they have a much greater eye on the actual outcome for the person, not just the legal issues in the case."
But not all of the recommendations to protect consumers have made it.
Recommendation D.O.A
It's difficult to judge exactly how many of the 76 recommendations have been made real.
Dead on arrival was a ban on how mortgage brokers get paid — commissions — or brokers being subject to financial planning laws. (There have been changes to so-called 'trailing' commissions.)
Many of the recommendations involved doing nothing, for example, keeping both the Australian Prudential Regulation Authority (APRA) and ASIC going. And others involved legislation and consultation that was delayed by the COVID pandemic.
Additionally, banks and consumer advocates disagree on what is meant by 'complete'.Essentially, where a recommendation has been 'watered down' or changed from what Mr Hayne directed, it has been marked as a fail by some, but a pass by others.
What is undeniable is that the recommendationswere intended to better protect consumers and most of them have done that.
Action taken
Beyond the recommendations, the searing royal commission examination of our corporate regulators led to a rapid change in attitude. They resolved to take more cases to court, push for harder penalties and take a harder line on wrongdoing.
That happened.
"We have taken all of the large banks to court, in some cases several times," says Sarah Court, who worked at the competition regulator (the ACCC) before starting at ASIC, which oversees corporate conduct.
"We have sued large insurers and superannuation trustees, there's been about $178 million in penalties awarded by the courts in both civil and criminal matters. Since the royal commission, there's been criminal convictions, and there's been $5.6 billion returned to customers"
Ms Court says ASIC has overseen redress to nearly seven million Australians over the past six years — a lasting legacy of the royal commission.
"Consumers now have a lot more protections than they did going into the royal commission. Penalties for misconduct have exponentially increased. There's new individual accountability for executives in financial institutions … there's been changes to advice laws and a whole range of other issues.
"Now, if there's another range of changes to come, then of course, ASIC will engage with those, but it's very important to bed down and make sure we are maximising (what) these new protections offer."
ASIC now has a 'product power' that lets it ban bad financial products, rather than have to wait for them to hurt people and then use litigation to try to stem the damage.
Unfinished business
But there's still unfinished business.
The 'point-of-sale exemption' in the National Consumer Credit Protection Act means a car dealership or retailer does not need to hold a credit licence or comply with responsible lending obligations.Instead, those responsibilities fall back on the bank or lender assessing and issuing the loan.
The final report of Kenneth Hayne's year-long royal commission recommended abolishing the exemption — but it hasn't happened.
For Karen Cox the problem is largest in car yards, where consumers desperate to be mobile are signed up to bad deals.
"The impact is on the people who can least afford it," she said.
"They are First Nations communities who live in remote areas, who are absolutely dependent on cars to just do the most basic things, like shopping, interact with the government, visit a relative," she says.
"They are being ripped off over and over, similarly (people) on the outer fringes of our cities and regional areas."
Unintended consequences
Scandals in financial planning, wealth management and personal loans — for smaller-than-a-house purchases like boats and cars — led big banks to sell off problematic businesses that were getting them into trouble.
"Banks have gone back to basics," peak body the Australian Banking Association said in a statement related to the five-year anniversary.
"Banks have simplified their operations: exiting financial advice, wealth management and insurance. They now have a razor-sharp focus on core banking services that serve businesses and households."
But in many cases, banks off-loaded the divisions to businesses that already had problems of their own, or lacked the scale and resources to do what is now required under new laws brought in the wake of the royal commission.
A further review of the financial advice industry in late 2022 revealed the number of financial advisers in Australia has slumped from around 28,000 at the time of the royal commission to 16,000.
The problem was detailed by author Michelle Levy, an expert financial services lawyer, in this circular fashion.
"It can be difficult and expensive for consumers to obtain personal financial advice. This is because it is difficult and expensive to provide that advice."
When the royal commission made it more difficult and expensive to provide that advice, it inadvertently pushed more customers away from being able to access financial advice that would benefit them.
Funeral problem
The royal commission closed a loophole that allowed the Aboriginal Community Benefit Fund (ACBF) to operate without a financial services licence.
Despite the name, the company was not indigenous-owned and had been chased unsuccessfully by regulators for decades.
At the royal commission, ACBF faced accusations of exploiting the cultural significance of funerals to Aboriginal communities and selling low value products, including to children. When it couldn't get a licence, it collapsedleaving around 15,000 people without cover that they paid for, many investing over decades.
"That was definitely an unintended consequence. Certainly the loophole needed to be closed," says Karen Cox. "But we needed to also take into account what was going to happen about all the people who had been ripped off over the decades leading up to that time."
The government introduced an interim scheme.
"And we hope, fingers crossed, that they are on the cusp of announcing a more long term resolution for those people."
Shadow banks
Another consequence is the rise of unregulated lending, from so-called 'shadow banks' to the explosion in buy-now-pay-later schemes (BNPL) like AfterPay and Zip.
"People have always done that," says Ms Cox. "But I think we've seen it go mainstream since the royal commission."
Demand for credit from people unable to meet bank requirements, or with a larger appetite for risk, has seen growth in non-bank lenders that charge more and have lower protections for borrowers.
ANZ boss Shayne Elliott suggests the banking sector’s responsible lending laws are a barrier, telling the Australian Financial Review:
“It is harder to get a home loan in Australia today than it has been in 30 years. The data tells us the average income today of a person getting a home loan is materially higher than an average citizen. That gap is continuing to grow so if you want a loan, you have to, essentially, be wealthy."
Responsible lending laws do exactly what the title says.
But bank bosses say privately that their businesses are no longer a great barometer of the overall economy or financial stress in it: because if you've managed to get credit with them you've jumped through so many hoops that your risk of failing to meet the payments is tiny.
The restriction on giving credit might be saving some people from trouble. But is it trapping others from getting ahead?
Scam explosion
The royal commission focused on historic misconduct by banks.
After winning back some of their tarnished reputation through the pandemic, the banking sector is seeing that trust erode through an issue that wasn't even raised: the spread of increasingly sophisticated scams.
"The losses suffered by Australians as a result of scams has risen just exponentially," says ASIC's Sarah Court. "This a 'whole of economy' issue that banks are really important players in, so too are the telcos, the digital platforms, and others."
The industry's peak body says the sector is focused onprotecting customers from the risk. The Australian Banking Association’s statement notes an "unwavering commitment to protect bank customers from the scourge of scams being served up to the community by sophisticated international criminal gangs."
Karen Cox isn't as reassured.
"This is going to be the next big thing that makes the banks look really terrible," she said.
"Because they say they're doing everything they can, they're lifting their game … but at the end of the day, the people who are losing their money are losing absolutely everything they've got.
"I'm not convincedthat (banks are) doing anywhere near enough. And if it was exposed in a royal commission-type forum, they would look really bad."
What's next?
For ASIC's Sarah Court, we don't need to wait for the next royal commission.
Whether it's scams, the impact of artificial intelligence (AI) or the next problem to face banks and their customers, the answer is simple.
"It doesn't matter what the new emerging issue is. We need to make sure that consumers are at the heart of how the financial system and its institutions work."
