Westpac scandal crowned banking's bad year

Australian shares finally joined the global equities party in 2019, but even the market's first all-time high in more than a decade couldn't wrest the spotlight from the big four banks.

They were mauled by the royal commission, forced to refund billions of dollars, slammed for the size of their rate cuts, and they helped send house prices surging, all while two CEOs lost their jobs and - most shamefully - one was accused of failing to stop pedophiles paying for abuse.

Even a prime minister who had, as treasurer, resisted calls for a royal commission into financial sector misconduct, felt compelled to call for accountability over the horrifying allegations against Westpac.

After days of delay, Australia's second largest bank cut loose chief executive Brian Hartzer, echoing NAB's parting with Andrew Thorburn following his savaging in Kenneth Hayne's final royal commission report.

That report, released in early February after sometimes tearful testimony from wronged customers, made 76 recommendations aimed at cleaning up widespread misconduct.

It set the stage for class actions over issues such as excessive superannuation fees even as Commonwealth Bank, Westpac, NAB and ANZ alone set aside about $3.5 billion in their full-year results to pay for their transgressions.

And financial regulator ASIC weighed in with legal action, including against CommInsure for unsolicited phone calls hawking insurance, against ANZ for charging unlawful account fees, and against BOQ and Bendigo and Adelaide over allegations of unfair small business lending terms.

But it was November's allegations against Westpac by AUSTRAC that grabbed most attention.

The financial crime watchdog accused Australia's oldest bank of 23 million breaches of money laundering laws, and of failing to properly monitor suspicious payments to Asia by known pedophiles.

The suspicion that many in the industry had failed to learn from the royal commission was seemingly confirmed by Mr Hartzer telling staff the public "was not overly concerned" with the scandal and urging them to focus on selling mortgages.

And mortgages were in the news as east coast house prices rose even more quickly than they had been falling as interest rate cuts and looser lending criteria turned what had been thought a necessary correction into an 18-month hiccup.

However, the banks that grew fat profits on the 2012-17 price boom enjoyed no such windfall this time as lower rates, competition and the cost of refunding wronged customers dragged down profits and hit shareholder returns.

Financial stocks were the worst performing sector over the year to early December, gaining just seven per cent against a near 20 per cent rise for the overall market.

Healthcare - boosted by a lower Australian dollar - and a tech sector boasting the WAAAX stocks of WiseTech, Afterpay, Appen, Altium and Xero were the standouts.

In July, the benchmark ASX200 index hit an all-time high for the first time since October 2007 and the global financial crisis.

It fell away on renewed worries over the US-China trade war only to set a new mark of 6,893.7 points in December.

After staying on the sidelines for nearly three years, the Reserve Bank cut the cash rate - a key component of lending and borrowing rates - to a new all-time low three times in five months from June in response to a raft of gloomy economic data.

Indebted households pocketed tax rebates that flowed from the federal government's May budget, leaving consumption and inflation below target and annual economic growth hitting a 10-year low amid stubbornly weak wage rises.

Intent on delivering a budget surplus, the government did not respond to the RBA's suggestions of fiscal intervention despite the threat to Australia's unmatched record of 27 years without a recession.

Consumers' reluctance to spend meant that it was another bleak year for some retailers, and David Jones' South African owners struck another $437.4 million from the value of the department store chain amid falling sales at traditional outlets.

Wage theft was a constant in 2019, with the Fair Work Ombudsman tagging high-profile figures including George Calombaris, Heston Blumenthal, Neil Perry and Guillaume Brahimi.

Calmobaris alone was found to have underpaid 500 current and former workers $7.8 million, while 75 per cent of lower-profile eateries across four capital cities were found to have been breaching workplace law.

Supermarket giant Woolworths admitted to underpaying nearly 6,000 employees by $300 million and was slapped with an employee class action alleging the final totals will be far higher.

Dulux and Ruralco were both delisted after being sold to overseas buyers, while Bellamy's investors overwhelmingly approved the infant formula maker's $1.5 billion takeover by the China Mengniu Dairy Company.

Austrlaian Associated PressBack to Breaking News

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