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Growing push for a banking and finance royal commission despite the Prime Minister saying no -

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MARK COLVIN: The push for a Royal Commission into the banking and finance sector is still growing - despite the Prime Minister calling it a distraction.

Political figures on Malcolm Turnbull's own backbench are arguing for it and Labor and the Greens both insist there should be a royal commission.

They dismiss Mr Turnbull's view that it is unnecessary because bodies like ASIC (Australian Securities and Investments Commission) already have the same powers as a royal commission.

Political correspondent Louise Yaxley.

LOUISE YAXLEY: There's pressure from the backbench to have a royal commission. Long-serving Liberal Philip Ruddock says the banking industry has serious issues it needs to address if it wants to avoid one.

Mr Ruddock joins former minister Luke Hartsuyker who says it is something that definitely should be considered.

And Nationals senator John Williams and Liberal Warren Entsch are both strong advocates for a royal commission.

Labor's financial services spokesman Jim Chalmers says they are reflecting community concern.

JIM CHALMERS: Malcolm Turnbull's backbench, they are in open revolt.

LOUISE YAXLEY: When pressed today about his backbench pushing for it, Mr Turnbull ignored the question to focus on Labor's support for it.

MALCOLM TURNBULL: The thought bubble of Bill Shorten to call for a royal commission into the banks is just a classic overreaction.

LOUISE YAXLEY: The Opposition leader Bill Shorten announced last Friday that Labor wants a royal commission.

Mr Turnbull is dismissive.

MALCOLM TURNBULL: They overlooked the fact, or don't want to remind people of the fact that a year ago they voted against having a royal commission when the Greens had proposed it. They haven't told us what the terms of reference would be. So what's it actually going to be about?

LOUISE YAXLEY: Jim Chalmers says the Opposition wants the terms of reference to be bipartisan.

JIM CHALMERS: Ideally, we would have the cooperation of the Government so we could sit down and agree in a bipartisan way the best way to regulate our financial institutions, the best way, the best terms of reference for a royal commission going forward.

LOUISE YAXLEY: Mr Turnbull argues it is not needed.

MALCOLM TURNBULL: ASIC has all of the powers of a royal commission, all of the powers of a royal commission plus much more. It has the ability to initiate prosecutions, to take action, to issue fines, to ban people from trading, from operating as company directors or in financial services.

So what we have already is a very serious, very comprehensive regulatory structure.

LOUISE YAXLEY: Mr Chalmers says that is wrong.

JIM CHALMERS: A royal commission has broader reach and it has broader powers. In fact, there's no more powerful body to look at systemic misconduct of the type that we're discussing here. So some examples of the things that a royal commission can do that the regulators can't do to the same extent, things like public and private hearing, the way that they deal with search warrants, the production of documents, the way that they can call witnesses from a wider pool than an individual ASIC investigation can. All of these ways that a royal commission is a far more substantial way to get to the bottom of these issues where some of our financial institutions have let their customers down in quite egregious ways.

LOUISE YAXLEY: Malcolm Turnbull says if ASIC - the securities and investment commission - needs more powers, he'd consider any request from its head Greg Medcraft.

MALCOLM TURNBULL: If ASIC needs to do more, then it's up to Greg Medcraft to identify where he needs more resources. We change the legislation; we improve it all the time.

LOUISE YAXLEY: Mr Chalmers says the Government's not committed to ASIC.

JIM CHALMERS: Well I mean of course they've pulled out $120 million from ASIC in the first couple of years of the Abbott-Turnbull Government.

LOUISE YAXLEY: Greens senator Peter Whish-Wilson pushed for the royal commission in the Senate last year when Labor didn't back him. He welcomes that they are now on board.

PETER WHISH-WILSON: My party has been pushing Labor as hard as we can to get support on this. The Labor Party is a lot bigger than the Greens Party and it probably takes longer to get everyone on board. I'm just glad that they've actually come to this decision, and that they've given a guarantee that if they form government after the next election that they will actually do this.

LOUISE YAXLEY: Senator Whish-Wilson says a more powerful body than ASIC is needed.

PETER WHISH-WILSON: The head of ASIC, Greg Medcraft, who's consistently sent messages about the culture in the financial services and banking industry and that something needs to be done about that. The problem with ASIC is that they tend to go after individual crimes, most often when it's been brought to their attention by whistleblowers they do very little surveillance work and they don't have the powers to look at systemic wrongdoing, which is exactly what a royal commission is set up to do.

ASIC tend to almost negotiate settlements when they do prosecute wrongdoing. They most often put in place what are called 'enforceable undertakings'. So that is they actually sit down and they work with the bank or the financial institution or the financial planner. And a lot of this is done obviously in the background with limited resources by ASIC. ASIC have always said they need more powers, especially administrative powers, and they've always said penalties for white-collar crime in Australia aren't in line with our other overseas countries.

LOUISE YAXLEY: And Peter Whish-Wilson says making the evidence public is an important reason to opt for a royal commission.

PETER WHISH-WILSON: It's on trial. Some of the fines we can levy on the banks would make very little difference to them, the way they look at, you know, costs and benefits. And I think reputational risk is something they do take seriously and a royal commission I think will give them a bit of a shakeup.

MARK COLVIN: Greens senator Peter Whish-Wilson ending that report from Louise Yaxley.