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A banking royal commission would not change much - Michael Pascoe

I'm ambivalent about supporting a Royal Commission into financial markets in general and banking in particular. Oh, it would produce plenty of stories and uncover further examples of egregious behaviour, but I rather doubt it would fundamentally change anything.

With the question of a royal commission now a political game, primarily pursued by Labor just to embarrass the Liberal Party, the government would be highly unlikely to set terms of reference that would encourage any radical findings, or appoint a commissioner who might pursue such things.

To prevent further financial advice scandals, there has already been one major reform in moving from a commission-driven sales approach to one based on fees. That turned out to be hard won with parts of the industry fighting it.

We could hope for three other big changes:

There's the financial planning boot that hasn't fallen – unwinding the vertical integration of the industry. At present, most planners are somewhat owned by the big banks and AMP. That inevitably creates a doubt about independence that holds back the industry's progression towards genuine professionalism.

But you don't need a royal commission to know that.

The spirit of that move away from commission-driven remuneration could be extended to the rest of the bank. But a royal commission wouldn't do that.

The third change is broader and much harder to quantify: It's about getting our banks back in perspective as servants of their customers and the economy, rather than hubris-riddled empires of vastly over-paid senior executives and out-of-touch directors.

The big banks need reminding that they primarily are glorified building societies – that's how they make most of their money and they should be rewarded for that service appropriately. Perhaps a return to the old savings bank/trading bank split could be mandated, but that, too, would be too radical a step for any royal commission.

Unfortunately, you can't mandate integrity. That's particularly on my mind because a retired banker friend of many years, Ellis Bugg, died suddenly last week. He was old school, a good and helpful man. Most of his long career was spent in the Commonwealth Bank's dealing room. That's where I first started interviewing him in the early 1980s, where he started educating me and others about financial markets.

A mutual friend recalled that Ellis built his fine reputation in banking and financial markets during the dynamic and volatile times that followed deregulation, a period of rapid change and financial innovation.

"But even with all the change that was going on, Ellis was rarely taken by the fads or fashions of the day," he said. "He understood that the fundamentals in banking or financial markets were always what counted and would determine what would happen over any period of time a prudent banker should be concerned about.

"People in banking and in the public sector welcomed his views on the issues of the day mostly because he was concerned about the integrity of banking markets, in every sense of the word."

Ellis had been acting as an expert consultant for ASIC in preparing its interest rate rigging case.

I don't think a royal commission could create more Ellis Buggs. Only directors and chief executives of character, people with their feet on the ground and their minds not on their bonus, could do that.

Ellis' funeral will be held on Tuesday, at 10 am at the Urunga Catholic Church, up near Coffs Harbour.  There will be a memorial service held at St. Kevin's Catholic Church, Eastwood, at 7 pm on September 15.