The Hayne Royal Commission: what it found, and what changed

By the time Commissioner Kenneth Hayne handed his final report to the Governor-General in early February 2019, the document ran to nearly 1,000 pages across two volumes. It named entities. It described conduct. And it asked, repeatedly, a question that had been studiously avoided for years in official circles: why did the law not apply to the people who were supposed to be subject to it?

I covered the public hearings from the press gallery. What struck me then — and still does — was not the individual episodes of misconduct, though some were genuinely shocking. It was the structural picture Hayne assembled across seven rounds of hearings: that misconduct in banking, financial advice, superannuation and insurance was not incidental. It was, in the Commissioner's measured language, widespread.

How the Royal Commission came about

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established by Letters Patent in December 2017, after years of pressure from consumer advocates, crossbench senators and a handful of persistent backbenchers on the government's own side. The Morrison government — then the Turnbull government — had resisted the inquiry for some time, before reversing course when it became clear the major banks themselves had written to the Treasurer indicating they would not oppose one. That detail tells you something about how the calculation had shifted.

Hayne, a former High Court justice, was appointed Commissioner. His terms of reference directed him to inquire into misconduct, and conduct falling below community standards and expectations, by financial services entities. He was given twelve months. It became fourteen.

Seven rounds of hearings, six sectors

The Commission held public hearings in Melbourne over seven rounds, examining consumer lending, financial advice, small business lending, the experiences of regional and remote communities, superannuation, insurance, and the regulators themselves, ASIC and APRA, in the final round.

Each round produced its own catalogue. In consumer lending, the hearings examined how banks had approved loans without properly verifying borrowers' living expenses, and how mortgage brokers operating under a conflicted remuneration model had incentives that ran counter to their clients' interests. The National Consumer Credit Protection Act 2009 was the applicable statute; the Commission found it had not always been applied with any seriousness.

The financial advice hearings are the ones most people remember, and reasonably so. They produced evidence of fees charged to clients who had died. They produced evidence of fees charged for services that were never provided — what became known publicly as fees for no service. The conduct at AMP, as examined by the Commission, drew particular attention: evidence was heard about misleading communications sent to ASIC, a regulator that the Commission later found had been too slow and too deferential in its responses to the industry it supervised.

What the final report actually found

The final report, published in February 2019, made 76 recommendations. Hayne was precise about what he was and was not doing: he was not running a criminal court. His role was to identify misconduct and make recommendations for reform. Where he considered criminal or civil referrals warranted, he said so — and made a number of referrals for the regulators to consider.

The core finding, stated plainly in the report, was that much of the misconduct examined could be traced to entities treating compliance with the law as a cost to be minimised rather than an obligation to be met, and to regulators who had preferred negotiation and remediation over enforcement. The report used the phrase "greed" more than once, without embarrassment.

On financial advice, Hayne recommended the abolition of grandfathered conflicted remuneration — trailing commissions that had been exempted from the Future of Financial Advice reforms introduced earlier in the decade. He recommended that mortgage brokers be subject to a best interests duty. He recommended significant changes to the way insurance was sold inside superannuation funds, finding that the sale of add-on insurance and the default inclusion of insurance in MySuper products had, in many cases, eroded members' balances without meaningful benefit.

On the regulators, Hayne was direct. He found that ASIC had tended to prefer what he called "negotiated outcomes" — infringement notices, enforceable undertakings, remediation programs — over litigation. He recommended that ASIC adopt, as a starting point, a presumption in favour of court-based enforcement where the law had been broken. APRA, he found, had been insufficiently focused on member outcomes in superannuation. Both regulators, the report said, needed stronger accountability mechanisms.

Fees for no service: the specific charge

The fees-for-no-service issue deserves its own paragraph, because it is the clearest example of what Hayne meant by conduct that was both unlawful and, in his view, dishonest. Multiple major financial institutions had charged ongoing advice fees to clients while not providing the advice services those fees were supposed to cover. This went on, in some cases, for years. ASIC had been aware of some of the issues before the Commission began. The remediation programs that followed ran into the billions of dollars across the sector.

For anyone who has followed the corporate accountability literature in Australia, the dynamic will be familiar. The James Hardie asbestos scandal showed a generation of regulators and legislators what happens when systemic harm is treated as a commercial matter rather than a legal one. Hayne's Commission showed the same logic playing out, on a different scale and in a different industry, decades later.

The legislative response

The government's formal response to the final report accepted, in whole or in principle, all 76 recommendations. The pace of implementation became a matter of ongoing scrutiny. The Financial Sector Reform (Hayne Royal Commission Response) Act 2020 and subsequent legislation addressed a range of the structural recommendations: mortgage broker best interests duty, restrictions on unsolicited selling of financial products, enhanced breach reporting obligations, and changes to the design and distribution obligations for financial products.

The Australian Financial Complaints Authority, which had been established shortly before the Commission concluded, was extended and its funding base adjusted. ASIC was given new directions about enforcement priorities. APRA received additional supervisory tools for the superannuation sector.

Whether the enforcement culture at the regulators genuinely shifted is a harder question. ASIC commenced a significant volume of litigation in the years following the Commission's report, though commentators have continued to debate whether the underlying incentive structures changed substantially, or whether the burst of activity reflected short-term political pressure. I don't think that question has a settled answer yet.

What Hayne declined to do

One aspect of the final report that received less attention than it deserved was what Hayne explicitly chose not to recommend. He did not recommend breaking up the major banks, or structural separation between banking and wealth management beyond what market dynamics and regulatory pressure were already producing. He did not recommend a banking tribunal. He was, by disposition and by the terms of his appointment, focused on conduct and accountability within existing structures rather than structural redesign.

Some critics argued that framing was itself a limitation. The conduct he documented was, in their view, a predictable product of structures that rewarded volume and short-term return over client outcomes. Hayne acknowledged the incentive argument; he did not accept that it required structural remedies beyond what the law could address.

I'd argue — and this is a view, not a finding — that history will be unkind to the regulators more than to the Commissioner himself. Hayne did what he was asked to do with considerable rigour. What happened afterwards, in terms of sustained enforcement culture, was always going to depend on institutions and people he had no authority over.

The public record and what it tells us

The Commission's public record — transcripts, exhibits, submissions and the final report itself — remains one of the most detailed accounts of how financial misconduct operates in a heavily concentrated industry. It is worth reading for that reason alone, independent of the policy debates.

Those records are held by the National Archives of Australia and substantial portions remain accessible via the Treasury website. The Commission's final report is available in full. If you're trying to understand how Australian regulatory failure takes shape over time — the pattern of awareness, inaction, political resistance and eventual forced accountability — the Hayne Commission report is primary material, not commentary.

For the broader landscape of corporate accountability inquiries in this country, our Scandals & Reckonings section covers the institutional history in more depth.

The final number from the Commission's own reckoning: 24 entities referred to ASIC or APRA for potential criminal or civil action. How many of those referrals produced proceedings, convictions or enforceable outcomes is a follow-up question the Commission itself could not answer. It handed that to others. Whether those others did enough with it is, even now, genuinely contested.

— Colin Ashworth, Scandals & the Public Record, Brisbane