Royal Commission

Commissioner Hayne’s Interim Report was released publicly on 28 September 2018. It addresses the case studies highlighted in the first four rounds of Royal Commission hearings (consumer lending, financial advice, loans to small and medium enterprises and issues affecting Australians who live in remote and regional communities), makes a number of observations about the conduct examined, and questions how and why it was so widespread.

Hayne’s view appears to be that entities and individuals have been motivated by financial gain or short term profit at the expense of basic standards of honesty. He does not make adverse findings in relation to breaches of the law (on the basis that is the role of a court), but does identify conduct that may have amounted to misconduct or fell below community standards and expectations. He comments that entities appear to have treated the law as applying only when and if they choose to obey it.

To move forward, Hayne asks ‘why did it happen?’ and ‘what can be done to avoid it happening again?’ He expresses a preference for simplification of the legal framework rather than additional regulation, noting that complexity can promote a ‘tick the box’ approach to compliance and obscure the simple principles that should govern behaviour in the financial services industry.

While Hayne states that each financial services entity is responsible for its own conduct, he also addresses the failings of the regulators. He is particularly critical of ASIC as the conduct regulator and notes that its approach so far has been insufficient to achieve deterrence. He acknowledges the prudential focus of APRA and accepts its approach to regulation needs to be viewed through the lens of its core objective to promote financial system stability, but still comments on its relative lack of enforcement action.

Finally, the report raises a number of policy questions, many of which go to core governance issues such as remuneration, culture, accountability, and risk management. The structure of this paper is as follows:

  • Section 2: Implications for directors and the regulators;
  • Section 3: Regulation and the regulators; culture, governance and remuneration;
  • Section 4: Policy questions arising from the report;
  • Section 5: Conclusions and commentary on institutions.


Your views are sought on key policy questions raised by Commissioner Hayne in his Interim Report, as well as the policy questions raised separately by the Royal Commission in relation to the Round Six (insurance) hearings.

For more information, see our consultation paper.