Fixing the Banking Mess !

This latest Commonwealth Bank scandal seems best described as " much adoo about nothing ! "  Bank staff activated dormant kids accounts by putting in a few cents to improve their performance statistics for the annual salary review and earn a small bonus by achieving goals under the banks incentive programme.

Older Australians will remember the bank visits to their school back in their school days.  The Commonwealth bank had the right to visit public schools and lecture on the merits of saving money.   They handed out shiny metal money boxes and implored kids to save their one and two cent coins to achieve a bright future and many opened savings accounts under this " Dollarmites " programme.

Those money box giveaways are long gone along with the one and two cent coins but thousands of kids have inactive accounts with the Commonwealth bank.  A few bright minds thought up an ingenious plan to extoll their personal efficiency in bank eyes by getting the credit for activating dormant accounts - and they did that by depositing a few cents of their own money.  The bank customer was totally unaware that this was happening.

This has been heavily criticised and the bank has announced that in future any such action will result in instant dismissal, but nobody has suggested any actual harm that it has caused.  It seems that the bank knew about this and condoned it with a chuckle.

A few decades ago Australia was served by about a dozen commercial banks.  Several British banks had branches in Australian cities and each state had a bank in its own name that traded widely in the cities and country towns.  Although trading hours were restricted, it was a time of intense bank competition for custom.

These banks competed with Building Societies and Credit Unions for funds and we saw an era of takeovers diminish the bank numbers until Australia had the " big four " dominating the banking scene.   Those building societies have since taken out banking licenses and a number of small" community banks " have emerged but the power of the big four is undiminished.

Perhaps we had the best of both worlds when the publicly owned Commonwealth bank competed with three major private banks.  This government owned bank was the pacesetter on how the money market operated and what rules applied.   When the Commonwealth was privatised and needed to deliver dividends to shareholders this need for profits saw  integrity suffer until the entire banking spectrum was involved in the depth of criminal activity revealed by this current Royal Commission.

It has been suggested that the Reserve bank of Australia should occupy that dominance once held by the Commonwealth bank and to do that it would need to actively compete with the big four.  It is hoped that this Royal Commission will have the wisdom to demand action necessary to reign in the excesses and that these will be implemented by the government.   The sorry state of affairs uncovered by the Royal Commission illustrate how far banking may descend when supervision and ethics are not being actively enforced !