HIH royal commissioner says 'hard decisions' ahead for banking inquiry

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This was published 6 years ago

HIH royal commissioner says 'hard decisions' ahead for banking inquiry

By Ruth Williams

The former senior judge who steered the landmark HIH Royal Commission has applauded the choice of Kenneth Hayne to lead the government's banking inquiry, but warned that "hard decisions" would need to be made on which issues to examine during its 12 month run.

Neville Owen, the former WA Supreme Court judge who spent 18 months examining the catastrophic 2001 collapse of insurer HIH, said Justice Hayne would face several big challenges as he prepared to launch the royal commission into the financial services sector - including assembling his team of assistants and advisors, setting down its procedures and deciding which areas to focus on.

"The real challenge is going to be in selecting the areas and issues [to look at] and the procedures that you are going to use," Justice Owen said. "You can't do everything, you are going to have to make some hard decisions. I had to make some hard decisions - I really needed another year, perhaps even 18 months, to cover off everything."

But he said that the tight time-frame allocated to the banking royal commission - a source of criticism in some quarters this week amid fears it would hinder the commission's ability to examine issues - could, in fact, prove valuable.

Justice Neville Owen ran the Royal Commission into the collapse of HIH.

Justice Neville Owen ran the Royal Commission into the collapse of HIH.Credit: Fairfax Media

Justice Owen said he found the "discipline" forced by a short time frame to be "very helpful" in completing his influential 2003 report.

"It causes you to focus your mind and get on with the job," Justice Owen said. "There comes a time when the findings you make and the report you make are too distant from the problems that have arisen to be of any real use."

The HIH Royal Commission's castigation of the Australian Prudential Regulation Authority - which it called on to adopt a "more sceptical, questioning and, where necessary, aggressive approach" in its supervision of the insurance industry - is credited with forcing the regulator to lift its performance, which proved crucial in the leadup to the global financial crisis.

"APRA copped a hell of a caning," Justice Owen said. "They took it on the chin... and really had a good hard look at what they were doing.

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Justice Kenneth Hayne will run the Royal Commission into the finance sector.

Justice Kenneth Hayne will run the Royal Commission into the finance sector.Credit: John Woudstra

"APRA is a much different body than it was in 2001."

He said the advantage of a judge-headed royal commission - over action by regulators, for example - was that it could make important policy recommendations "informed by, and based on" the evidence it examined.

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Justice Owen's royal commission cost $40 million and ran for 18 months, which included one extension of several weeks. It identified 56 potential civil and criminal breaches against 17 individuals linked to HIH, two of which - Ray Williams and Rodney Adler - were jailed, while some others received suspended sentences. Justice Owen also made 61 policy recommendations, which helped shape reforms to Australia's corporate laws, regulation and culture.

Justice Owen is also known for overseeing the five-year Bell Group litigation, one of Australia's longest running, most expensive and most complex civil cases. He is now the chairman of the the Catholic Church's Truth Justice and Healing Council, which is coordinating the church's response to the child abuse Royal Commission.

There comes a time when the findings you make and the report you make are too distant from the problems that have arisen to be of any real use.

Neville Owen

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