• The Banking Code Compliance Committee (BCCC) has sanctioned Bendigo Bank for four years of breaching the Banking Code.
• There will be no penalties however, beyond being named and shamed.
• Set up in the aftermath of the financial services royal commission, the lack of penalties issued by regulators would appear to be one of the major criticisms leveled during it.
• Visit Business Insider Australia’s homepage for more stories.

If the banks were ever really concerned that regulators would keep them on their toes, that fantasy has now surely been put to bed.

On Wednesday, Australia’s newest banking watchdog the Banking Code Compliance Committee (BCCC) bared its teeth for the first time and, in doing so, revealed it might be more gum than anything.

The BCCC officially sanctioned Bendigo and Adelaide Bank, the fifth largest bank in Australia, for “systemic breaches” that saw it run roughshod over customer protections in place to shield Australians in hardship and facing debt collection. Specifically, it took issue with Bendigo’s Great Southern Loans (GSL) unit for contravening the Banking Code over the course of four years.

The BCCC found Bendigo failed to comply with the code when it came to dealing with complaints, privacy, those customers experiencing financial difficulty, and even to act “fairly and reasonably”.

While the bank’s infringements are serious, however, the BCCC’s response is anything but. Acknowledging that Bendigo has since addressed those issues and promised to remediate customers, the bank will face zero penalties. No fines, no repercussions, just a little name and shame action for four years of breaches. In fact, given the average person would have no idea what the BCCC is, even that tactic is largely impotent.

To add insult to injury, it’s important to realise the BCCC was set up in the wake of the financial services royal commission. While Commissioner Kenneth Hayne managed to knock loose at least one CEO and chair in its aftermath, he also shone a light on the failed state of financial regulation in this country. It was clear this had helped get Australia to the stage where there was little incentive to put customers before profit.

“Saying sorry and promising not to do it again has not prevented recurrence,” Hayne wrote in his final report.

Indeed, one of the most important findings to come out of it – aside from the widespread practice of charging fees to dead people, ripping customers off to the tune of billions of dollars and exploiting the vulnerable — was that the existing regulators were more akin to industry playmates than prosecutors. Rather than pursue out in the open, often misdemeanours were dealt with behind closed doors.

And yet, eighteen months on from those findings – and Hayne’s recommendations, which have still not been implemented by the federal government – it’s not clear the state of financial services crime and punishment has improved one bit.

Of course, given its course of action on Wednesday, it’s entirely possible the BCCC hasn’t had a chance to read Hayne’s final report either. If so, here’s just one snippet for its reading pleasure.

“Misconduct will be deterred only if entities believe that misconduct will be detected, denounced and justly punished,” Hayne wrote in it. “Misconduct is not deterred by requiring those who are found to have done wrong to do no more than pay compensation. And wrongdoing is not denounced by issuing a media release.”

If he published it again in 2020, maybe Hayne would tack the words ‘or sanction’ on at the end.

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