ORIGINALLY APPEARED IN THE AGE

Yet another scandal among Australia’s banks suggests the industry is in dire need of a clean-out. Westpac has committed one of the most startling failures of corporate governance in Australian history. After a year-long investigation, the bank stands accused of failing to report, as required by law, 23 million transactions that it had facilitated, and, in particular, failing to notice a series of suspicious transactions originating from South-east Asia that have been implicated in child exploitation.

The consequences for Westpac continued to mount. The bank is expected to be fined more than $1 billion. It lost $6 billion in market capitalisation, or 7 per cent of its value. Its chairman and chief executive have both resigned. All of this is fair enough. The allegations are extremely serious and, if proved, demonstrate an almost-incredible negligence.

Inevitably, these facts raise the question of whether a policy response is required, and what kind. Given the recent Hayne inquiry into various kinds of malfeasance by Australia’s banks, it would be understandable if the first recourse that comes to political minds is more legislation or regulation. But this would be a mistake.