This coming week, it has been five years since then-prime minister Malcolm Turnbull announced a royal commission into scandals and misconduct in the banking industry.

So, did we fix banking?

The answer is probably, 'um … kind of'.

As we hit the milestone, there are worrying signs the industry is sliding back to its old ways, where what's good for customers comes a distant last behind the priorities of executives, the institution and shareholders.

Good news

Banks have spent hundreds of millions of dollars on fixing their systems to avoid future problems.

The banks have also been made to pay back customers. A lot.

The latest estimate from regulator the Australian Securities and Investments Commission (ASIC) is mind-boggling:

• A share of more than $3.6 billion has been paid back to more than 1.4 million customers for 'fees for no service' misconduct and financial advice that was 'non-compliant';
• The insurance industry has paid back more than $1.3 billion for mis-selling junk insurance, failing to deliver on price discount promises and poor sales practices;
• As of the middle of the year, ASIC was monitoring 36 remediation programs across superannuation, advice, credit and banking and insurance. Money has been paid back to more than 3.4 million consumers, with another 2.7 million still waiting.

That's huge and deserved. Banks and financial institutions look after people's money, and profit handsomely off it. But they are providing a service, not a shakedown.

Of the 76 recommendations, many have been implemented. 

Some fixes — like stopping penalty interest going on top of farm loans already behind in repayments — were made unilaterally by the banks.

Others were delayed by the pandemic. More still are undergoing consultation. For example, credit products are highly regulated and can only be sold be licensed individuals, but the "point of sale exemption" means that's not necessary in car yards.

At a recent committee hearing, Finance Minister Katy Gallagher was asked by Greens senator Nick McKim how the process was travelling.

"We are committed to taking action on 75 of the 76 recommendations," she said.

The final recommendation is about how mortgage brokers are paid. Labor didn't agree with Hayne's model of transparency, but does want to ban trailing commissions — a kind of until the end of time payment — that Mr Hayne believed was detrimental to brokers always acting in the borrower's best interest.

Essentially, there's a lot of work still to be done, but there are already greatly improved protections for consumers.

Bad news

After a thorough shellacking during the banking royal commission, and the implementation of some harsh recommendations, banks purged problems.

Difficult businesses that got them in trouble – like financial planning, insurance and wealth management – were largely sold off.

But a telling decision by the industry's key body shows you the bad old days aren't completely over, where customers are kept in the dark, wrong-doing by banks is hushed up and any reporting on failures by banks is hidden from view.

Here's what happened. The industry's lobby group, the Australian Banking Association (ABA), wrote a new code of practice to govern how it treats customers and inserted references to it in the long contracts for products like loans and credit cards.

Compliance was entrusted to the Banking Code Compliance Committee (BCCC), which would investigate breaches and sanction bad banks — to try and lift standards across the entire industry.

That's fallen down.

After three years, the committee has investigated just 10 breaches. (It does do other work, like providing advice on things like how the entire industry could, for example, do "getting out of direct debits" better).

With just 13 staff, fewer than one for every billion dollars of profit the big four banks made last year, the committee was already under-staffed and out-gunned.

Then, it got worse.

Stay silent

The committee, formed from the ashes of the ineffective one that preceded it, was forced to hold an independent review after its first two years.

The review made 19 recommendations, but in doing so exposed the weakness at the heart of what should be protecting consumers.

The committee, the enforcers of doing the right thing, must beg for powers from the ABA — the lobby group protecting the interests of the banks the committee is trying to monitor.

It's mind-bending stuff.

Late on a Friday, 312 days after it received the review, the ABA responded to the committee's request for more powers.

It agreed with 18 of the 19 recommendations.

(One of the things it agreed to fix was a ban on the committee taking reports of wrongdoing to the regulator unless the bad conduct was still going on. If it had stopped, it couldn't tell ASIC that anything had gone wrong in the first place).

But on the big test, it failed — and showed you exactly what the big banks think about scrutiny.

The committee asked for the power to force banks to publish details on their own websites if they were named for not complying with the code of practice. The ABA said 'No'.

Committee chair Ian Govey called it "disappointing".

Most people would probably call it scandalous.

The decision means any pretence of effective and transparent oversight has been undermined. Bank customers don't read reports from the Banking Code Compliance Committee. Almost no-one does.

Instead of forcing banks to let customers know when the institution has done the wrong thing, the industry's lobby group has succeeded in keeping the current system: where no-one is likely to find out.

Inside the banks, there are further problems.

Risk appetite

A big survey by the Australian Prudential Regulation Authority (APRA) shows a massive gap between how well executives think things are going and what the workers below them are seeing.

More than 165,000 surveys were sent out to every bank staff member in the country. With a high response rate, the results are a serious warning for banks.

To the statement, "In my part of the business, sufficient resources (budget, systems, skills, capacity) have been committed to improve how we manage risk", 76 per cent of chief executives agreed.

The problem is that the governance and risk parts of banks ask the hard questions like: "Should we be doing this?"

And when staff who actually work in those areas answered the survey, just 58 per cent agreed.

It doesn't matter what the statement is:

• "In my organisation we are encouraged to escalate risk issues promptly"
• "It is safe to speak up in my part of the business"
• "People in this organisation admit when they have made mistakes"

Each time, chief executives and top-level staff answered "Yes" much more often than staff actually working at the coalface.

Why is this important?

Because nearly every single scandal and tear-stained case study in the banking royal commission was not uncovered by a regulator. The warnings were usually raised by staff: a junior lawyer, an IT contractor, a teller.

Low- and medium-level staff kept trying to tell executives and bosses that serious problems were occurring. Again and again they were rebuffed or silenced.

The APRA report, titled "No room for complacency on bank risk culture", suggests the conditions that let that occur have not disappeared.

Where to from here

Recently, the final case arising from the hearings by commissioner Kenneth Hayne finally ground through the court system: ANZ has to pay a $20 million fine for dudding customers who had an offset account that should have reduced their mortgage payments but didn't.

With that, the industry's turnaround is almost complete.

The Commonwealth Bank, the subject of so many scandals the royal commission could have just been into it, was last year named the most powerful brand in the nation.

The industry's quick action during the pandemic – it offered to put mortgages on 'pause' before the government was dragged into creating the JobKeeper wage subsidy – has repaired a lot of the accumulated reputational issues that triggered the calls for a royal commission in the first place.

But the dangers remain.

The choices the banking industry make will determine if Kenneth Hayne gets to enjoy life as a law professor or risks getting dragged back to do it all again in five years' time.