A philosophical argument has raged for generations between those who advocate laissez-faire, light-touch regulation where the buyer must beware and those who argue that naive consumers must be protected by the state against financial sharks.
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The final report by the royal commission overseen by Kenneth Hayne will take months to digest.
But if its recommendations are implemented, it will clearly move the dial a long way towards protecting consumers from being ripped off.
The report is not as radical as some who observed the hearings may have wanted.
The big banks have not been broken up and Commissioner Hayne has not called for their directors and chief executives to go jail.
He has urged the regulators – the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority – to take a tougher line but he has largely left it to them to work out what to make of his findings.
It was a real effort to favour the needs of the consumers over the greed of the big banks.
But Commissioner Hayne’s cautious approach minimises uncertainty and allows banks to continue providing credit to the community at a time when heavy debt levels have already forced a slowdown in credit growth.
Despite the intensity of the rhetoric around the inquiry, the existing system can be made to work.
Commissioner Hayne said mortgage brokers should be banned from taking commissions from banks because it creates a conflict of interest.
He said they should instead charge customers a fee, like doctors or lawyers.
Treasurer Josh Frydenberg has agreed to ban some types of commission which create the clearest incentives to over-sell mortgages, but he says that mortgage brokers cannot survive without commissions from banks and without small mortgage brokers there will no competition.
Let’s hope we can look back on this week and see it as the start of the era of re-regulation of the economy.
The time it became clear our politicians were no longer willing to give big business an easy ride.
Big business may have power and money, but customers and employees have votes and voices. And those voices have spoken loud and clear.
