The government of the day will duly oblige, said Mr Lucas, rightly fearing “the political fallout if it fails to implement the report’s recommendations in the wake of the malevolent behaviour being unveiled”.

“The legislation will pass the parliament, giving the regulators more power to keep the top end of town in line, and the regulators, whose reputations have been mauled in Justice Kenneth Hayne’s courtroom, can be expected to finally bite more than they bark,” he said.

“Will more regulation prove the answer – or will it just be a political panacea for government. I suspect the latter.”

Mr Lucas referred to the Storm Financial implosion in January 2009, which resulted in the FoFA reforms coming into effect on 1 July 2012.

“That legislation addressed conflicted remuneration structures, required financial advisers to act in their clients’ best interests, had an opt-in obligation requiring advice providers to renew their clients' agreement to ongoing fees every two years, and gave ASIC more powers,” he said.

“Yet clearly it was no solution. It led to an acceleration in the vertical integration model, also encouraged by regulators to reduce the number of entities to regulate. The result was to produce the very issues being aired at the royal commission.”

Mr Lucas said governments that receive recommendations from inquiries like the royal commission, should be questioning the industry’s structure, the over-arching policy goals and, in this instance, consumer behaviour before responding.

“The government can then determine the KPIs for regulatory bodies, perhaps without adding more regulation. But don’t hold your breath,” he said.

“What government should do on receiving the royal commission’s recommendations is to take the time to get the industry structure right for a digital world. Certainly, look at regulation, but don’t think for a moment this is the complete answer.”

The recent consultation between Treasury and the ACCC on the introduction of Open Banking, an initiative to increase competition, does not inspire confidence, said Mr Lucas.

“The proposed plan is to make it easy for the big four banks and other ADIs to become accredited to receive data, while the rest of the industry will need to jump through hoops, including demonstrating why they are “fit and proper” persons,” he said.

“The banks, however, seem excluded from this test. How Treasury can reconcile the banks being fit and proper in the wake of the royal commission, including recommendations to lay criminal charges against CBA and NAB?”

With the royal commission tarnishing the brands of the big four and AMP, this provides an opportunity for new market entrants to play by different rules.

“To do so, they just need an industry structure that ensures a level playing field for all. If this emerges from the royal commission, then it won’t simply punish past sins, but help create an environment in which a healthy, innovative financial services industry can flourish,” he said.