The letter the banks never wanted you to see: Secret note sent Scott Morrison show how the big four helped to water down the royal commission

  • A letter has revealed how big four banks shaped the banking Royal Commission
  • The letter, acquired by the Australian Council of Trade Unions, was sent in 2017 
  • NAB  chairman Ken Henry sent the 'draft' letter to then Treasurer Scott Morrison
  • The letter made comments on how the royal commission should be conducted 

By Mark Brook For Daily Mail Australia

Published: 00:09 EST, 6 February 2019 | Updated: 00:09 EST, 6 February 2019

A secret letter addressed to the Federal Government has revealed how the big four banks helped shape the banking royal commission.  

The letter, which was acquired by the Australian Council of Trade Unions under the freedom of information act, details how the banks thought the commission should be conducted. 

National Australia Bank chairman Ken Henry sent the 'draft' letter to then Treasurer Scott Morrison on behalf of the chief executives of big four banks in November 2017.

Australian trade unionist and political activist Sally McManus (pictured left and right) voiced her concerns over the letter during a live broadcast on Periscope on Tuesday

National Australia Bank chairman Ken Henry (pictured) sent the 'draft' letter to then Treasurer Scott Morrison on behalf of the chief executives of big four banks in November 2017

National Australia Bank chairman Ken Henry (pictured) sent the 'draft' letter to then Treasurer Scott Morrison on behalf of the chief executives of big four banks in November 2017

'Dear Treasurer. Further to our discussions, attached is a draft letter sent on behalf of the major banks. This remains subject to final approval,' Dr Henry wrote. 

A follow-up letter was then sent to Mr Morrison the next day, and the Turnbull government responded by calling for a royal commission, ABC News reported.

Australian trade unionist and political activist Sally McManus voiced her concerns over the letter during a live broadcast on Periscope on Tuesday.

Ms McManus said the letter basically described 'how good the banks are how they've been held up to scrutiny and that there's no problems.' 

The letter made reference to how long the royal commission should go for, the type of person the commissioner should be, the terms of reference, and the scope of the commission, she said.

Ms McManus said the follow-up document from Mr Henry bared a striking resemblance to the 'draft' - with the exception of a few minor changes. 

She then questioned how the correspondence might have affected the integrity of the royal commission.

'How can it be that you call a royal commission and you consult the very people now found to have been engaged in a whole lot of criminal behaviour? 

Ms McManus (pictured) said the letter basically described 'how good the banks are how they've been held up to scrutiny and that there's no problems'

Ms McManus questioned how the correspondence between the Federal Government and the big four banks might have affected the integrity of the royal commission

Ms McManus questioned how the correspondence between the Federal Government and the big four banks might have affected the integrity of the royal commission

'How can you consult them about the commission and about how it's held, and about who the commissioner should be and about how long it should go for?

'It really goes to the heart of the problem, doesn't it?' she said. 

Ms McManus added the commission was set up in a way to limit the damage to the big four banks so there wouldn't be systematic changes to the heart of the problem.

She added the key problem is been driven by profits and by greed. 

'Scott Morrison has got a whole heap of questions he needs to answer about working hand in glove with the big four banks,' she said. 

What did the letter say? 

'Dear Treasurer. We are writing to you as the leaders of Australia's major banks. In light of the latest wave of speculation about a parliamentary commission of inquiry into the banking and finance sector, we believe it is now imperative for the Australian Government to act decisively to deliver certainty to Australia's financial services sector, our customers and the community.

'Our banks have consistently argued the view that further inquiries into the sector, including a royal commission, are unwarranted. They are costly and unnecessary distractions at a time when the finance sector faces significant challenges and disruption from technology and growing global macroeconomic uncertainty.

'However, it is now in the national interest for the political uncertainty to end. It is hurting confidence in our financial services system, including in offshore markets, and has diminished trust and respect for our sector and people. It also risks undermining the critical perception that our banks are unquestionably strong.

'As you know our banks have acknowledged that we have not always got it right, and have made mistakes. Together with the Government and regulators, since 2014 we have been taking action to fix issues, and improve what we do and how we do it. We have collectively appeared before, or taken part in 51 substantial reviews, investigations and inquiries since the global financial crisis, 12 of which are ongoing.

'We continue to demonstrate our commitment to doing the right thing by our customers and seeking to ensure those genuinely affected by these mistakes are appropriately compensated.

'A strong, well-regulated and well-governed banking system is in the interests of all Australians and is critical to job creation and fairness. The strong credentials of the banking system ensured Australians were spared the worst of the Global Financial Crisis, and have been fundamental to the ongoing performance of our economy despite global and domestic political turmoil.

'We now ask you and your government to act to ensure a properly constituted inquiry into the financial services sector is established to put an end to the uncertainty and restore trust, respect and confidence.

'In our view, a properly constituted inquiry must have several significant characteristics. It should be led by an eminent and respected ex-judicial officer. Its terms of reference should be thoughtfully drafted and free of political influence. Its scope should be sufficient to cover the community's core concerns which include banking, insurance, superannuation and non-ADI [authorised deposit-taking institution] finance providers.

'Further to avoid confusion and inconsistency, the inquiry must to the most practical extent replace other ongoing inquiries.

'It is vital that the terms of any inquiry consider the many reviews and inquiries that have been conducted into the banking sector in recent years; the significant government and industry-led reforms that have been and will shortly be implemented; the 44 recommendations made in the Financial System Inquiry in 2014; and the broad and positive contribution that banks make to the Australian economy and to millions of customers and shareholders.

'It is also important that any inquiry reports back in a timely manner so that we can have certainty about the findings and move forward to implement any recommendations.

'We will work hard to ensure our contribution to any process helps to further strengthen Australia's financial services system.

'Throughout this, our focus will remain on our customers. We are proud of the work our people do every day to support them. That work continues.'

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The letter the banks never wanted you to see

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