Will the banking services royal commission have a lasting effect of improving the banking and financial sector? The answer is “no”. A temporary change is apparent, but the problems lie deeper than those addressed by the royal commissioner.
The response to, and government capitulation on, the Hayne recommendation regarding mortgage broking fees starkly illustrates the point.
Why is it happening? The answer lies partly in this comment of Royal Commissioner Kenneth Hayne on page 54 of his interim report:
First, many financial products and services are “credence goods” where the consumer needs them but is unable to assess their real worth either before or after the purchase.
The arguments made in this paper are developed in more detail in “The Hayne Royal Commission and Financial Sector Misbehaviour: Lasting Change or Temporary Fix? Economics and Labour Relations Review, Vol 30 (2), June 2019.