Comment: Angered and enthused - the disconnected response to Labor's banking royal commission

Labor's call for a banking royal commission may have well and truly hit the right chords. First, with the mass market of voters (one that overlaps, by and large, with the "mass affluent" segment hunted by most retail banks).

Noisy, self-appointed spokespeople for this cohort are cheering Labor on. A sample of the stirrers includes the long established Banking and Finance Consumers Support Association and its founder Denise Brailey and the popular Facebook groups Bank Reform Now and NAB Fraud Fighters.

Active bank loathers on Twitter are all on board, such as former CBA staffers, the well known CommSec whistleblower Jeff Morris  (handle: @jmwhistleblower) and David Easton (handle: @whistleblowerOz) as well as the self styled consumer champion, trading as The Advocate, Michael Fraser.

The second target is the banking industry leadership, personified by the chief executives of the major banks.

The mass of voters, this newsletter infers, is in favour of the royal commission, a line of thinking the Australian Bankers Association may be hard pressed to derail. Industry Super, unsurprisingly, is a willing support of a camp already aligned with Labor.

Probably more than two decades of careful industry work to detach itself from the entrenched idea of the late 1980s and early 1990s that "banks are bastards" is being undone.

By 2003, when this newsletter lurched into being, then ABA executive director David Bell framed that journey as one of measured progress, secured in part by product, pricing and service reform, as well as improved handling of complaints, all central to the industry ethos more than a decade later.

Over the last decade and more, banks have received what amounts to plaudits in one accessible measure of consumer 'satisfaction' produced each month by Roy Morgan Research.

Indeed, in recent years major banks have more or less reached and sustained a record rating on this series well into the 80 per cent range - although those elevated levels still trail the high 90 per cent scores of the most highly regarded little banks.

Closely held and rarely reported research commissioned by the Australian Bankers Association from Labor's principal pollster, UMR Research, is widely understood to present a less favourable view of community perceptions on banking.

Key insiders almost never let the results slide into the public domain, though the Financial Review cited UMR findings several years ago that showed that 45 per cent of people have a negative attitude towards banks, 36 per cent have a positive attitude, and 19 per cent were neutral. All these findings are consistent with the few gloomy and limited references referenced by senior bank executives on the conference circuit.

Banking Day over the weekend asked the ABA's PR chief for a briefing on the most recent UMR research. May this soon reach the public domain.

The ABA and its members are of course casting around for a deterrent to Labor's banking royal commission, one practical option being undisguised support, some of a direct financial form, for the Liberal and National parties, now in their third year of a coalition government and maybe only days away from setting a date for an election.

The commentaries of one of the banks', and big businesses, most well read opinion writers on the Financial Review, is also breaking on the popular side of the bandwagon. The AFR's Phillip Coorey this weekend circulated tales of NAB's CEO getting feisty with Labor's Chris Bowen, a reaction other CEOs may have suppressed or hidden.

Coorey added that that "there may be more bad news concerning bank behaviour in the pipeline" - no doubt the work of a Fairfax colleague, ensuring this will be one more noisy week for all responding to the Labor inquisition into the industry.

Coorey also helped shed light on the machinations of Labor's decision making and timing on the announcement ten days ago. In short, diligent preparation on the option enabled a swift response after Malcolm Turnbull engaged in his own, limited, bank bagging at a lunch to mark the 199th anniversary of the foundation of Westpac.

Saturday Paper columnist Mike Steketee cited a Labor-supplied "list of notable developments relating to the various scandals involving just the big four banks and Macquarie, catalogued and scrupulously footnoted."

How Bill Shorten, Chris Bowen, Treasury and the Attorney-General's Department will ever focus a royal commission (supposedly centred on misconduct) from wandering off as a versatile star chamber reconsidering innumerable private grievances (Bankwest, Wilmot Forests, Timbercorp, Great Southern, Storm, to reach for five famous episodes of borrower agitation) has to be the principal issue to manage.

So far there's no meaningful talk of a banking industry-funded anti Labor campaign, in the 2010 mining style. Presented with this scenario late last week by Fairfax Media, ABA CEO Stephen Munchenberg proffered a dead bat; "we haven't ruled it out."

For a final word, let's pick up the editorial of Cuffelinks editor Graham Hand, author of the industry expose 'Naked Among Cannibals'. That 15 year old book drew on his work as a senior executive at State Bank of NSW. Hand went on to work as a money manager at Colonial.

Hand wrote on Thursday: "I was asked onto ABC Radio to give my views on the need for a royal commission. I argued against spending maybe two to three years and $50 million for a regular news feed on bank bashing.

"Rather, fund ASIC properly and put social and political pressure on the bank CEOs and chairs to deliver on their promises to improve culture and ethics.

"We can't legislate for the values and behaviours expected of our banks."