What does same sex marriage and a Royal Commission have in common?

What does same sex marriage and a Royal Commission have in common? Politics.

You first need to know the background

The Turnbull government (conservative in Australia) is all of a sudden promoting themselves as the hero of democracy. While the same sex marriage social outcry has not particularity been high on the agenda for the Labor party (liberal in Australia) until recent years, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has.

While the Turnbull government continues to decline in popularity – there were two political hail Mary’s that they could say they made happen as a nice little “up yours” to those opposite them in the chamber – even though traditionally these things are far from the agenda of a conservative government (scandal right!). I’ll also add for those reading abroad that the leader of the Turnbull government, Malcolm Turnbull is probably one the most left of the right side of politics or maybe the most right of the left. I won’t add his view on climate change in this post.

Further to the complexities of the current state with uncle Malcolm at the helm, his government is formed by a coalition of the National Party (very conservative) and the Liberal Party of Australia (right of centre).

I can’t really see much of a difference in both of the major parties in Australia at the moment. 
— Glen James

Without boring you with the history of the two main political parties, the Liberal government (led by Malcolm Turnbull at present) has a been known for small government, friends of big business and the free market. The opposition Labor party (led by Bill Shorten at present) has a history of being heavily union influenced, promoter of large government with a socialist lens and not a fan of big business.

 Malcolm Turnbull being smug when same sex marriage received royal ascent. If it was not for him - this wouldn't have happened!  (Sarcastic font)   Source here

Malcolm Turnbull being smug when same sex marriage received royal ascent. If it was not for him - this wouldn't have happened! (Sarcastic font) Source here

This is why it’s a big of a wow moment that the Turnbull government announced that there would be a Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. They denied they were going to do this for years. There has also been many Parliamentary Joint Committees (PJC) in relation to banking and financial service in recent years.

While I acknowledge same sex marriage was indeed supported by the majority of those on the right of politics, conceptually this has not been a mandate of the right. I’ll prove it. Tony Abbott (former conservative prime minister) won the 2013 general election while publicly stating many times that he does not support this and that it wouldn’t happen under a government he led. It was also a significant win for him. I further acknowledge the social momentum which has occurred on this topic since 2013 to date.

I can’t really see much of a difference in both of the major parties in Australia at the moment. 

It’s going to happen anyway

If you’re down on luck and need a political win or two… what do you do? You give the people what they want! It’s amazing how much people will potentially like you more if you give them what they want. This works for pets and children, too. This goes a little deeper so enter the art of politics.

The chances of the Turnbull government maintaining it’s rule after the next election is somewhat low. Same sex marriage and a Royal Commission into Financial Services have been on the “first 90 days” of a Labor government agenda for a while.

 A rare glimpse of the decision making process inside of the current cabinet room.

A rare glimpse of the decision making process inside of the current cabinet room.

Malcolm to far right: "hey, same sex marriage is going to happen anyway – let us make it happen and we’ll try and ensure freedom of religion expression is maintained. It might not be if the other side make this happen".

Malcolm to big business (&banks): "hey, the Royal Commission is going to happen anyway – let us make it happen and we’ll set the terms of reference to not go as hard on you and to try and ram a pole into union led superannuation fund offices".

So… if you’re on the right of politics – who would you rather make these things happen if they are happening anyway?

If you’re a political strategist – what do you do? I actually don’t know that, as I’m not a political strategist.


What’s a Royal Commission?

Glen James Sort Your Money Out

The first Royal Commission in Australia was in 1902. It’s essentially a formal public enquiry set up for a specific topic, triggered by the government of the day. Usually a retired judge will head up a Royal Commission and once a Royal Commission starts – the government can’t stop it!  Most monarchies use this methodology for a public enquiry. There have been more Royal Commissions in recent times than any other time in our history. My own view is they are a political way to extract the dirty lies from the darkness as a “look what we did” or “we cleaned this up”. I’m not down playing these as I do think they needed when people have lost their livelihood due to unscrupulous activities or operators, child abuse etc. As once it’s rolling – the government can’t interfere. Hence, the terms of reference are important for a government pulling the trigger – see below.

My issue is when they are used for politicking.
— Glen James

My issue is when they are used for politicking. Like, I understand the Royal Commission into trade union governance and corruption didn’t have the desired outcome that the Abbott government was looking for. It found that corruption was widespread. Everyone knew that already! I can only trust this process actually changes things and the legislators act on the recommendations. There is a saying “only commence a Royal Commission if you already know the outcome”. I think it’s a saying anyway.

A Royal Commission can summon a witness. They can compel those witnesses to produce documents. They can force testimony - even self-incriminating testimony, eliminating the right to silence in the process. They can apply for search warrants*. Sounds like you can’t plead the 5th in Australia if summoned to a Royal Commission. So they are a useful tool!

Recent well known Royal Commissions:

  • Royal Commission into HIH Insurance (2001–2003)
  • Royal Commission into the Building and Construction Industry (2001–2003)
  • Royal Commission into the Home Insulation Program (2013-2014)
  • Royal Commission into trade union governance and corruption (2014-2015)
  • Royal Commission into Institutional Responses to Child Sexual Abuse (2013-present)

The closest equivalent in the in the United States of America would probably be a Grand Jury.

Terms of Reference

This is where the rubber hits the road. If you’re a banker you would rather your friend set the terms of reference. These details do not really matter politically as the news headline of “we are launching a Royal Commission into x” is the win.

These terms dictate what needs to be achieved, who will take part in a Royal Commission, how it will be achieved and when it will be achieved by.

One might say the terms of reference for a conservative government in Australia (Liberal Party) might have more emphasis on industry superannuation funds and union involvement in such whereas a liberal government (Labor Party) may have more of an emphasis on big banks and big business.

The draft terms of reference for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry can be found here.

If there is one thing to remember, you can’t legislate out frauds and dishonest people.
— Glen James

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

 Malcolm Turnbull and Scott Morrison announced the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry on 29 November 2017.

Malcolm Turnbull and Scott Morrison announced the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry on 29 November 2017.

This enquiry will be presided over by a former high court judge Kenneth Hayne. It will start early 2018 and will have 12 months to deliver its findings.

My beef

My beef with the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is that I’m not sure it will uncover much more than what the public already knows. In short, I believe it’s a political stunt just so uncle Malcolm can say he did it and not the Labor party – like same sex marriage legislation being given royal ascent under his name.

Even the money laundering scandal at CBA has been thrown into public light already, banks over charging fees, class actions, irresponsible lending, dodgy financial advice from the top banks – the list goes on. We know it all and it’s already being fixed or has been. A lot of it already in the wake of the GFC.

As particular interest to me is the delivery of dodgy financial advice (as I’m a licenced financial adviser by day), fraudulent financial advisers, predatory selling of financial products to consumers at banks and superannuation reform.

 This is my credit card application from three years ago. A bank worker said she would sort it out for me. She said she would email me the "sign here" pages to sign. I signed them. What great service! Credit card approved. She later emailed me the full application for my records. I was wondering why I got approved, as my personal income that year was VERY LOW due to some business investment I made (under $20,000 income) and my personal living expenses out did my income on paper. I was surprised I was approved. Looking on this application, the bank worker fraudulently put that I had over $1.7m of assets. The issue is now because I signed the application - I made the misrepresentation. This is an example of how there needs to be some work done in banks with bonuses for employees. 

This is my credit card application from three years ago. A bank worker said she would sort it out for me. She said she would email me the "sign here" pages to sign. I signed them. What great service! Credit card approved. She later emailed me the full application for my records. I was wondering why I got approved, as my personal income that year was VERY LOW due to some business investment I made (under $20,000 income) and my personal living expenses out did my income on paper. I was surprised I was approved. Looking on this application, the bank worker fraudulently put that I had over $1.7m of assets. The issue is now because I signed the application - I made the misrepresentation. This is an example of how there needs to be some work done in banks with bonuses for employees. 

My beef continued

In recent years there has already been so much change and reform surrounding the delivery of financial advice and the way advisers must conduct themselves.

Some examples are the Future of Financial Advice (FoFA) reforms already in place (this weeded out a heap of dodgy advisers and helped consumers know what they are paying an adviser for), the Life Insurance Framework (LIF) which is currently underway. This is to help consumers not be sold new life insurance policies by dodgy advisers getting high up-front commissions every 12 months and a reduction in high upfront life insurance commissions. These changes will also have an impact on direct life insurance, i.e. the life insurance you see advertised on TV.

Finally, raising the bar surrounding education requirements for financial advisers, namely new entrants being degree qualified and having a professional year, existing advisers needing to be degree equivalent and everyone passing an exam. The Financial Adviser Standards and Ethics Authority Limited (FASEA) has already been established and is working on the details.

What will be the result be of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry?

This is any one’s guess. Here are a few things I’m thinking about:

  • Lending & mortgage brokers may have their turn in the spotlight due to the unprecedented level of household debt in Australia. Also, most certainly due to the boom in broker channels for mortgages.
  • Bank tellers bonus structures around referring to in house financial advisers and possibly credit card sign, home insurance and other sign ups
  • Bank employed financial advisers and approved product lists
  • Self-managed superannuation using debt to buy property – might be the end of it soon
  • Negative gearing might get touched on re: lending – not sure
  • Bank product fees
  • Bitcoin (jokes, just can’t talk about money without this word at the moment)
  • Superannuation fees
  • Superannuation fee disclosure – this has already been dealt with though
  • Industry Superannuation funds and union links
  • Possible executive salaries
  • Possible employee bonus structures
  • Financial advisers in general (although most the dodgy ones have left with the aforementioned reforms)
  • Government guarantee of deposits and bailouts etc

If there is one thing to remember, you can’t legislate out frauds and dishonest people.

GJ


Glen James Sort Your Money Out

Glen James is a financial professional with many years experience helping people like you.

He is conservative and somewhat a contrarian in the way he delivers his practical financial help. Glen has a particular interest in personal finance and small business. 

Click free gift if you would like a copy of my ebook - 8 Simple Steps to Sort Your Money Out


* http://www.abc.net.au/news/2014-07-01/berg-shining-a-light-on-the-dangers-of-royal-commissions/5562354