You have to admire the government’s dogged determination to look after the big banks. In the face of almost universal opposition to its plans to remove consumer protections from financial advice regulation, including at one stage from the key financial planning industry body, it has ploughed on, bringing in by regulation what it couldn’t do by legislation, even though its drafters mucked up the regulation and reintroduced open slather on conflicted payments to financial planners.

This is despite the Commonwealth Bank’s best efforts to demonstrate, in painful detail, what exactly happens when planners are encouraged by remuneration systems to direct clients into wholly inappropriate platform products, and if clients don’t agree to be so directed, fraudulently manufacture their agreement. Even the Treasurer’s mother-in-law ended up being a victim of “rogue planners”, a term that makes it sound like the problem was isolated to a handful of miscreants rather than reflecting the way Commonwealth Financial Planning did business.

The government is now torn between declaring everything is now fine with the Commonwealth Bank, and with financial planning more generally, and keeping an eye on the extent to which the CBA’s government-prompted apology and compensation process pass the basic test of community trust. It’s a little hard to pass judgment on that at this point given we don’t know which independent experts will form the bank’s assessment panel, a crucial detail missing from yesterday’s announcement.

But both the Commonwealth and the government will be heartened by the initial response of Nationals Senator John Williams, who initiated the Senate inquiry into ASIC and who backed the committee recommendation for a judicial inquiry. “CBA has learnt a lot from this whole process and I acknowledge it has been working to transform its financial planning arms in recent years to regain public trust and confidence,” Williams said yesterday after the CBA announcement. “[CBA CEO Ian Narev] has shown leadership with today’s announcement which I am sure will be excellent news for those people who suffered at the hands of rogue financial planners in the nine years period.”

With all the focus on the Commonwealth since the inquiry, the ostensible sector regulator, the Australian Securities and Investments Commission has gotten off lightly. Remember, this is a regulator so gobsmackingly inept that it not merely ignored repeated efforts by whistleblowers to alert it to what was going on at CFP, when the CBA itself alerted ASIC to the activities of one of its worst planners, ASIC simply lost the report.

And that was before it had its budget significantly cut, as it did in May.

The result — $50 million so far in compensation for clients of the CBA, and almost certainly tens of millions more in further compensation, not to mention the losses inflicted on the wider financial services sector as potential customers turn away from financial planning, unable to trust planners.

You can bet your entire retirement income stream that if an industry super fund had behaved as the CBA behaved, a handpicked Coalition crony would already be heading a royal commission. Instead, the government has worked assiduously to deregulate the retail super sector.

We have an idea of the kind of 70s-style, mateship-based regulation model that will flow from this. The big banks will be permitted to gouge, rip off and exploit financial planning clients, with no intervention by a toothless, underfunded regulator, and allowed to mislead parliamentary committees about their actions, with no repercussions, until they go so far that it puts political heat on the government. At that point, the regulatory mechanism will be a government minister — say, Mathias — picking up the phone to a CEO — say, Ian — and urging them to back off and offer compensation because it’s all looking too embarrassing.

We know this is the regulatory model because, with the government’s gutting of FOFA, the past in financial planning is the future.