But until the public humiliation of the royal commission putting individuals and institutions on spectacular public show, much of ASIC’s frustration was blocked by complicated legal defences and obfuscations. Even now, delays remain unacceptable to ASIC, with the report saying the institutions “have failed to sufficiently prioritise and resource their reviews”.

According to ASIC, the main reasons for delays include poor record keeping and systems, failure to propose reasonable customer-centric methods of compensation and a legalistic approach to what they are required to provide.

That much is certainly true. The new chairman of NAB, Phil Chronican, is the latest to write another mea culpa in a letter to shareholders this week, declaring the bank would focus on “earning back trust”.

Cry me a river, as Scott Morrison declared when imposing the banking levy.

It’s always more complicated than the headlines, of course. Suspicion of the banks is now so great, for example, some say it’s become a difficult, protracted process to persuade people to swap their old products and services for improved, cheaper plans. In the light of the lousy publicity, people are concerned the banks will dud them on anything new that’s on offer.

But the banks don’t have any choice but to become more active in pre-empting – as well as responding to – any potential consumer grievances. After all, both ASIC and the Australian Prudential Regulation Authority are under as much pressure from the royal commission as the banks to change their ways. They are supposed to be far more aggressive in pursuing legal action rather than quietly trying to negotiate changes and compensation payments though voluntary agreements or enforceable undertakings.

If not quite a first resort, the prospect of legal action is now supposed to come a pretty close second. It’s more a case of the regulators having to justify an “if not, why not” approach – and in a much speeded-up time frame. That will clearly test the banks. It will also test the lawyers, the regulators and community perceptions about how quickly and fairly “justice” can be dealt with through the court system.

Westpac has long been regarded as the most willing to challenge the authority of the regulators, if necessary by going to court. One such example was Westpac’s refusal to settle with ASIC over the bank bill swap rate case – with both sides claiming legal vindication from a mixed judgment. Westpac was also reluctant to agree to a settlement with ASIC based on the bank’s failure to adequately vet mortgage clients.

Yet even Westpac’s eventual $35 million deal with ASIC over mortgage lending was eventually thrown out by the Federal court late last year. The case is now headed back to court in May after the judge said either Westpac really had breached responsible lending laws 10,500 times – in which case the penalty was inadequate – or it had not – which was still unclear and meant no penalty should be imposed.

It’s still the less obvious costs to all of this manoeuvring that create the real economic uncertainties.

Despite everyone’s polite insistence the new climate will not affect banks’ willingness to lend, evidence of much greater delays and reductions in the amount of credit approved is roiling an already struggling mortgage sector. That’s not the only reason home lending is down by more than 20 per cent in the last year, the biggest decline in a decade, but it clearly has a major impact.

Any reductions in small business lending may be less visible and less politically potent, but would be just as economically damaging.The latest ABS figures show lending to business is up 2.5 per cent in January relative to January 2018 but NAB’s latest survey of business conditions shows conditions declining in February, with profitability and trading now below average.

Then there’s the financial advice model which created so much of the reputational damage for financial institutions. Many (if not most) people who paid for conflicted – or non-existent –advice were either not helped or left worse off. With the exception of Westpac, the banks have decided it’s not worth continuing with wealth management businesses given new rules and community expectations.

These also mean a majority of people won’t be willing to pay upfront fees for unconflicted financial advice. That may be an improvement, given the alternative.

But good intentions – as well as bad ones – often come at an unanticipated cost.

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