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Banks may rue not facing a royal commission as they are grilled in Parliamentary inquiries

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The banking industry may ultimately end up paying a hefty price for avoiding a royal commission. Day one of the second of what will be regular Parliamentary-conducted bank inquisitions was not a pleasant affair for National Australia Bank boss, Andrew Thorburn.

Not only did Thorburn have to deliver a progress card on the recommendations and issues covered by the Bank Inquiry Mark 1 last October, but he also had to respond to all types of questionable behaviour uncovered since then.

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It must be starting to feel like death by a thousand cuts. Undoubtedly the remaining three bank bosses due to go before the  committee next week must also be asking whether it was all worth it. These ongoing  inquiries make the banks targets - often frozen in the headlights.

And the irony is that the longer these intense grillings continue, the more pressure for a royal commission builds. The push by the Liberals to avoid the more onerous rigours of a royal commission may backfire on the banks.

At one point towards the end of Friday's three-hour grilling, Labor MP Matt Thistlethwaite asked the real money question: Why, given the 20 separate and expensive investigations currently on foot into the banking industry, wouldn't it be easier to just have a royal commission?

Thorburn said there was no need for a royal commission because the industry was well governed and well regulated.

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Maybe that question would have been more pointed if Thistlethwaite had asked Thorburn why banks are so set against a royal commission if this well governed and regulated industry had nothing to hide.

Last October the banks assured the first  inquiry that the skeletons were out of the closet. All that previous bad behaviour and mistreatment of customers had been addressed. Various processes had been put in place, investigations had been done and the bad apples had been identified.

Unfortunately for NAB in February it was revealed that a fresh round of super customers had been found to have been overcharged - leading to an additional $35 million in compensation.

Thorburn says this was evidence that the checks and balances were working and the mistake was the result of poor execution rather than misconduct.

He was put under intense pressure from a couple of inquiry members about the case of the infamous planner, Graeme Cowper, whose conduct some years back led to customers being compensated by $7 million.

Thistlethwaite suggested that not only did NAB not sack Cowper, it allowed him to resign and gave him a payout, reportedly of $180,000. Thorburn wouldn't answer.

The MP then asked how much commission Cowper earned during his time at the bank. "I also understand you write him a very nice letter...this is a man that you've admitted breached your code of conduct...and you allow him to resign and give him money. I mean, are you living in the real world?"

That was 2009, Thorburn says. Things have changed.

The trouble for Thorburn - which the other banks will also have - is the question whether banks have changed enough, and whether the fact that many of the frontline staff still have a financial incentive for selling product means there remains pressure on them to sell more products and service that are not necessarily in the customer's interest.

The committee members will surely be salivating at the prospect next week of asking Westpac chief executive Brian Hartzer about this week's legal action by the Australian Securities and Investments Commission regarding the selling of loans that breached responsible lending rules.

And even when you look past behavioural issues, the inquiry has used the forum to place a spotlight on, among other things, movement in interest rates, competition issues, executive pay, sharing credit details and the industry's ability to ditch a loan if the security on the loan has fallen but the customer is still paying interest.

Banks may rue the day when they issued a collective sigh of relief, thinking a series of Parliamentary inquiries was an easy outcome.

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