Australia has a system of public inquiries called royal commissions, and they've become a particularly popular way for politicians to "respond" to the public's concerns. One of these commissions was called in 2017 to conduct a review of the banking and financial services industry after a series of exposés unearthed misconduct including bribery, money laundering, and even the charging of service fees for customers who were already dead. Australia has two financial regulatory bodies: the Australian Prudential Regulation Authority (APRA), and the Australian Securities & Investments Commission (ASIC). The commission found that both had fallen to regulatory capture from the Big Four Australian banks, causing them to turn a blind eye when evidence of this misconduct had been presented to them for years.
When the commission concluded in 2019, a report of recommended actions was presented for parliament to consider. While some of it seems sensible, I nearly spat out my drink when I reached Recommendations 6.13 and 6.14. They call for "a new oversight authority" consisting of "three part-time members" and "regular capability reviews" to keep APRA and ASIC from being captured by the banks again. A regulator to regulate the regulators. The absurdity of this is two-fold – not only would this super-regulator be just another target for the banks, it would also present an incentive for APRA and ASIC to take up their own lobbying efforts to swing its oversight in their favor, thereby adding even further to the inefficient allocation of resources. It seems like the bill implementing this authority has yet to pass, but I think I need to take some public choice material back home with me if even our highest form of public inquiry can produce recommendations like this.
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