Former Labor senator Mark Bishop says a royal commission into the banking sector could start issuing reports within six months of starting. Credit:Alex Ellinghausen 'They just get shafted' "This is what happens when there's no transparency with the public, especially for whistleblowers," he says. "They just get shafted because it's easier to shaft one person than a billion dollar-plus institution," he said. It is why a royal commission is important, "to investigate the problems in an open arena", the IOOF whistleblower said.

Since opposition leader Bill Shorten pledged a week ago to hold a royal commission into the financial services sector if he wins office, the Turnbull government and the banks have tried their best to dampen it, offering an alternative package of reforms and arguing that a royal commission would be a waste of time, costly, internationally damaging, "populist" and that ASIC has more powers than a royal commission anyway. Midweek, when the government realised it wasn't getting any cut through in the polls, Treasurer Scott Morrison announced a new-look ASIC with beefed up powers and resources – after previously cutting its budget by $120 million. Banks move A day later, in seeming lockstep, the banks outlined a separate suite of reforms to address concerns about "pay, whistleblowers, complaints and bad apples". They even agreed to appoint an independent expert to oversee the package.

But after so many scandals and abuse of their social licence, the banks have breached customer trust. Trust is hard to repair, which is why something more dramatic and voluntary reforms and a regulator with extra cash in its pocket and more powers isn't enough. Remember this was the same regulator that was criticised as too timid in a Senate inquiry in 2014. While it is taking steps to improve its image, it has a long way to go. This is a sector that has faced a string of scandals including the CBA financial planning scandal, NAB's scandal both here and in the UK, Macquarie, IOOF, bank bill swap rate rigging and CommInsure's life insurance scandal. These are not one-off events but evidence of systemic problems that need to be properly examined. CommInsure whistleblower sacked

In the case of CommInsure, allegations include file tampering, missing medical records, doctors being leaned on by claims managers to change their opinions, cherry picking of doctors to get desired outcomes, policies that include in the fine print out-of-date medical definitions, and excessive and unfair claims delays and denials. Many of these allegations were made by CommInsure whistleblower Dr Benjamin Koh, who was the life insurer's chief medical officer until he was sacked in August 2015, eight months after he blew the whistle to CommInsure. Mark Bishop, the former chairman of a powerful Senate inquiry that called for a royal commission into CBA in 2014 on the basis that the regulator couldn't be trusted to investigate the bank itself, still believes a royal commission is necessary. He says a process worthy of consideration is to have a set of interim reports delivered in six and 12-month periods in the lead-up to a final report delivered after two years or 30 months.

First report in six months He says a first interim report could be finalised after six months and would address the adequacy of the banks' response to those clients who lodged applications for financial redress. To date the resolution rate of files of former Commonwealth Bank clients and others is excruciatingly slow. Many of those clients have not received redress because of poor or non-existent file maintenance by the bank. Sometimes there was actual fraud. At a minimum there was gross negligence. A second interim report could be finalised after a further six months and include recommendations into the utility of enforceable agreements, analysis of the industry remuneration practices, assessment of the role of legal firms and consumer organisations and the need for a stand alone industry-funded independent institution with a charter to resolve all outstanding complaints within a defined period.

Such an independent institution would have a suite of powers including enforcement, arbitration and determination of financial matters in dispute. Government might consider giving such agency a defined life. The entire process would be public and transparent. Bishop says a third interim report would be completed after 18 months and look at the value and need for statutory protection for whistleblowers, the adequacy of the oversight role of directors and relevant board committees of companies including access to minutes and interviewing of key personnel and a review of the government action and implementation of the first two reports. Culture comes last The final report would look at the culture and financial incentives of the industry, including the organisational structure of wealth management divisions and vertical integration within the financial services industry.

It would also look at the way claims are reviewed and the need for alternative or large settlement measures, the need for upskilling of professionals of the entire industry and keep pressure on the industry and government to force renewal and reform. Bishop says such a series of reports would expose the excesses of some sectors of the financial services industry, deliver much needed financial justice to long-waiting clients and impose new standards for the doing of business. Sadly, such necessary reform is left to the vagaries of politics and who wins the federal election. One thing's for sure, the debate about a royal commission and the need to clean up the sector has well and truly become mainstream, which is where it should have been all along.