Bank investors on Friday delivered a verdict on the interim report of the royal commission into financial services - it could have been worse. By Monday, the market seemed to reverse this decision, with major bank stocks retracing Friday’s share price gains and then some.

After the initial relief that Commissioner Kenneth Hayne suggested the banking industry didn't need a raft of new laws and regulations, it just needed to obey those already in place, investors began to realise that the outcome could be the same.

The prospect of banks being forced to abide by the law will likely be an expensive exercise for them. This shifts the emphasis from the behaviour of the banks to that of the regulators in enforcement.

The wildcard in this scenario is the government - or more particularly the desire or desperation of both sides of politics to be seen as agents to clean up the financial services industry.