FIN202 – Financial Institutions - “Should A Royal Commission Be Held Into The Australian Banking System?”

Internal Code:MAS3361

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Case Study: Over the last few years, a number of issues relating to the behavior of one or more Australian banks have received significant adverse publicity. Many customers have claimed that they have been unfairly treated by the banks in relation to matters such as: - high and/or untoward bank and credit card fees and charges; - inappropriate financial planning advice by bank representatives, resulting in large monetary losses to individual customers, particularly to retirees; - rejection or non-payment by the banks of life insurance claims; - delays by the banks in reducing interest rates on bank loans following reductions in the official cash rate; and - other perceived injustices negatively impacting on customers. These issues have resulted in a number of customers, some of the media and at least one major political party calling for a Royal Commission into the banks, with some parties arguing that there are deeper systemic issues within the sector. Other sections of the population, media and the political process have argued against this action, claiming that the existing regulatory processes are sufficient to safeguard the banks’ customers. You are required to examine the issues in contention, identify the arguments in favor of – and those against - a Royal Commission, and offer reasoned recommendations for what the Government should do.