Ms Derville Rowland:

Most of what the Senator says is well observed. We have all lived in this country and seen successive scandals. For that reason, it is important that the banks be held to account by means of a strong, clear regulatory framework, that we be robust in our challenge to them and that we demand high standards. I do not just mean in terms of financial regulation but also in the context of the entire system of accountability. Transparency is a part of that. It is my impression that having more information about the outcome of enforcement cases - we have attempted to be as transparent as possible within the requirements of confidentiality - is to the benefit of pressurising the system.

Conduct risk was not on the table in boardroom discussions.

It may be that they knew very well about liquidity provisions or other prudentially focused provisions. However, there is something about requiring the people who run the lending institutions to discuss the impacts on their customer base of the products they design and sell. The incentives must be considered because they help as a driver for better culture. We have been in an after-the-event compliance environment, historically, in respect of our approach to these things. Scandals occur and are followed by aftermaths and clean-ups. There always will be difficulties and scandals, I think. I am experienced enough in financial regulation to be somewhat pessimistic about it. However, someone has to keep dropping in the medicine. We have got to have high standards, expect more and keep driving for that challenge. We must work together to bring about a more proactive consideration of consumer impact. I wonder how often anyone in a boardroom discussed impact on consumers before products were sold. I think they are discussed after things happen. We have to foster a more incentive-based, structured, forward-looking approach. I do not say that will solve everything but the time to have the conversation is certainly before it happens, not afterwards. In fact, we probably will always need to have both.

In respect of the conditionality on banking licences, I can perfectly understand the Senator's observation. That is a legal matter that would have to be very carefully done, although I certainly accept the sentiment of the remarks.