Roundup: Australian government to set up banking tribunal after inquiry

The Australian government will establish a banking tribunal following its three-day inquiry into the banking sector this week, Prime Minister Malcolm Turnbull confirmed on Friday.

The government held the three-day inquiry following fierce backlash at a decision by the major banks to not pass on interest rate cuts from the Reserve Bank of Australia.

The heads of the Commonwealth Bank, ANZ, Westpac and NAB all faced three hours of questioning about how they can better serve their customers.

The inquiry uncovered a number of incidents including non-refunded "error" fees which cost consumers millions of dollars, records of poor financial advice which bankrupted many, high executive salaries as well as sustained cases of "rockets and feathers", in which bank interest rates shot up quickly like rockets when the RBA raised the cash rate, but fell slowly like feathers when the interest rate fell.

The government would set up an independent tribunal which would allow customers to raise banking issues without having to hire costly lawyers and proceed through the legal system, Prime Minister Malcolm Turnbull told Adelaide's 5AA radio Friday.

"We will get a low cost, speedy tribunal to deal with these types of consumer complaints, customer complaints against banks," Turnbull said.

"This will be real action."

Turnbull said the government better understands "these institutions work" and said it had made deliberate moves to address cultural change within the banking sector.

The banks have also backed the government's plan; Westpac CEO Brian Hartzer said the government should "simplify (the appeal process) and make it clear so that customers know where to go", while the heads of both the ANZ and the Commonwealth Bank have also indicated they would support a tribunal.

However opposition spokesperson Katy Gallagher described the inquiry as a "stich-up" and said Labor would continue to push for a royal commission.

She said 70 percent of Australian voters want a royal commission into the banking sector, and that the Prime Minister's tribunal idea has a worrying lack of detail. She said it was little wonder the banks were happy to throw support behind his idea.

"We're not prepared to accept the sham process that existed this week, a stitch up that existed," Gallagher told the press on Friday.

She said the CEOs of the four major banks "walked away comfortable in the knowledge that under this government there will not be a royal commission."

Also on Friday, former Prime Minister John Howard broke his silence on the issue; following the opposition's hard-line approach, he said he was "astonished" there would even be consideration of a royal commission.

Howard, who led the nation from 1996 until 2007, said Australia's banking sector was so well-run that it helped Australia survive the global financial crisis which crippled other first-world nations such as the United States.

"It's astonishing to even consider a royal commission into a really safe and well-run banking system," Howard said on Friday.

"It's a well-run and profitable system that helped Australia through the global financial crisis better than anyone else. Endit