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Economy

Australia banks face heavier oversight following scandals

Royal commission lambastes financial industry for taking care of itself before customers

Misconduct at Australia's four major banks and other institutions emerged around 2014.   © Reuters

SYDNEY -- A royal commission on Monday recommended that an independent supervisory body be set up to oversee Australia's financial industry regulators.

The recommendation was one of 76 included in a damning report unveiled by the Australian government. The royal commission's report lashes out at lenders for placing sales above all else. It also lambastes them for collecting fees for services they did not actually provide.

In addition, the report says government organizations, including the Australian Securities and Investments Commission, have not effectively carried out their duties to supervise financial institutions.

The 76 recommendations range from how financial institutions should collect fees to how government agencies should carry out their supervisory roles.

Speaking at a news conference on Monday, Treasurer Josh Frydenberg vowed to implement all 76 recommendations.

News of misconduct at Australia's large financial institutions and other lenders emerged around 2014. The government in November 2017 decided to set up the royal commission as an independent investigative panel. The commission spent about a year investigating misconduct.

Major financial institutions paid compensation to their customers in tandem with the royal commission's probe. They also abolished products and services cited as problematic and sold off subsidiaries.

AMP, one of the country's major financial institutions, in January announced that its net profit for 2018 s likely to have tumbled 96% from a year earlier to 30 million Australian dollars (about US$21.6 million).

The announcement came as AMP had to spend more than expected to cooperate with the royal commission's investigation and in paying compensation to customers.

The Commonwealth Bank of Australia, the country's biggest lender, last year announced it would sell its asset management subsidiary to Japan's Mitsubishi UFJ Trust and Banking.

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