Costello: where were the regulators?

Speaking at a Centre for Independent Studies breakfast, Mr Costello said Australia’s regulators must take some responsibility for the behaviour uncovered by the royal commission.

“It’s all very well to say ‘oh well banks didn’t obey the law, they should be investigated and prosecuted’, but you gotta remember all the way through that banking is a very highly regulated industry in this country, very highly regulated – I know because I put a lot of that regulation in place,” he said.

“We had a corporate regulator all the way through here, and if you want to say that the banks were misbehaving, I want to ask where the corporate regulator was, and I hope by the time we get to the end of this royal commission, the commissioner asks that question as well.”

Mr Costello added that he was “not excusing bad behaviour” on the part of the banks, but that it’s important to ensure the country’s regulatory bodies “were on the job” during the instances of misconduct.

In addition to his remarks about regulatory effectiveness, Fairfax Media publications have reported that Mr Costello also cast doubt this week on the future of commissions paid to advisers.

“I think the reality is that commissions are going to be banned,” Mr Costello was reported to have said.

“These big financial houses are going to have to rethink their model … It may not be just that there have been some scandals. It may be that the whole model is now under pressure, and that's what they are going to have to think about.”