Malcolm Turnbull insists bank inquiry unnecessary after fresh rate-rigging case

Malcolm Turnbull has said that calls for a royal commission into alleged rate-rigging across the nation's banking industry are unnecessary, after noting his faith in the Australian Securities and Investment Commission. The calls have come as ASIC launches legal proceedings against National Australia Bank, the third bank to face legal action for rate-rigging allegations in the federal court. The Labor party believe a royal commission is needed in addition to the ASIC investigation to determine the illegality and culture of the banking, in order to hold the larger banks accountable.

Malcolm Turnbull has rejected calls for a royal commission as a third bank faces legal action for rate-rigging allegations, saying the financial watchdog was “sinking its fangs” into suspects.

The prime minister said the corporate sector was “well regulated” and the government had already increased the Australian Securities and Investment Commission’s powers and resources.

“The watchdog is sinking its fangs into a few suspected culprits and doing his job, that’s what he should do.”



But Labor has redoubled its efforts to push for a bank royal commission after Asic launched legal proceedings against National Australia Bank for “unconscionable conduct and market manipulation”.

The allegations relate to setting the bank bill swap reference rate (BBSW) during the period 8 June 2010 to 24 December 2012. NAB will fight the claims.

Asic is also investigating Comminsure – the insurance arm of the Commonwealth Bank – which is accused of manipulating reports to avoid life insurance payouts to sick and dying customers.



NAB is the third bank, after ANZ and Westpac, to face rate rigging allegations in the federal court and the news spilled into the federal election campaign where Labor and Greens have been pushing for a bank royal commission.

Bill Shorten said evidence for a royal commission was growing by the day.

“How many more people need to suffer and get ripped off before Mr Turnbull stops covering up for the banks?” Shorten said.

“Rather than hold the big banks accountable, Mr Turnbull is gifting them a $7.4bn tax hand out.”

Labor’s shadow treasurer, Chris Bowen, said addressing the public’s trust in budget was not a binary choice between Asic or a banking royal commission.

“We don’t have to say we can have Asic or the royal commission, you can have both,” Bowen said.

“Asic is determining illegality, Asic is determining whether what has happened here is illegal. They may or may not be able to prove that to the standard of proof required.”

Bowen said the culture required investigation as well as the “cowboy-like behaviour”.

“We are interested not only in the illegality but in the culture that allows this to happen,” Bowen said.

“If you read the transcripts of the tapes you see the contempt not by everybody involved but by people making key decisions on Australian interest rates which means the Australian economy, businesses, have paid the price for that contempt.

“That is a matter of culture as much as it is a matter of law. Asic can not determine culture.”

The finance minister, Mathias Cormann, said the Coalition had already given additional powers to the watchdog with the “same powers as a royal commission”.



“It is important to note that the alleged events took place between 2010 and 2012 under the period of the previous Labor government, incidentally when Bill Shorten was the minister for financial services,” Cormann said.

“Since then we have had a financial system inquiry, there have been various inquiries through the Senate. We don’t need more enquiries. We need to ensure that a well resourced regulator with the appropriate powers can take effective action. That is precisely what Asic is doing.”

In a statement after Asic announced the action National Australia Bank Group’s chief risk officer, David Gall, said “trust in the integrity of our financial markets is crucial to a strong Australian economy”.



“A fair, well-functioning and competitive financial system is crucial to providing the best outcome for customers and the wider community,” Gall said.

“NAB takes its role in upholding high standards of professional conduct seriously. We are committed to service, integrity and ethics and our values reflect this.”

The Greens finance spokesperson, senator Peter Whish-Wilson, said the Asic case against NAB highlighted the “inadequacy” of the penalty regime for white-collar crime, given the the BBSW was used to price $2.5tn worth of securities trades each year.

“The maximum civil penalty for market manipulation is capped at $200,000,” Whish-Wilson said.

“This is ridiculous. It’s the equivalent of a parking fine for the big banks. They simply factor this into the cost of doing business.

“Australia’s penalty regime is not deterring the sort of behaviour that is alleged. Asic needs to be given the power to recover ill-gotten gains. Disgorgement provides a real deterrent. Taking back the money that is effectively stolen will provide a real deterrent.”