As the royal commission smashed the reputations of major financial institutions this week, there was understandable focus on the individuals involved and the inherently flawed structure of vertically integrated wealth management. “Fee for no service” — the charging of customers for services banks and AMP had no intention of ever providing — is only the most recent of a long list of consequences of the major institutions’ involvement in financial planning and wealth management. But understanding AMP and the Commonwealth Bank’s systematic ripping off of customers and their equally systematic role in trying to hide it from the regulator, as purely the result of individual venality and a corporate structure that incentivised it, can mislead.

I’m a bit like a broken record on this, but it’s crucial to understand the sort of outcomes exposed by the royal commission as the result of an entire policy system, otherwise any response risks treating the symptoms rather than the cause. As anyone with a rash will tell you, treating symptoms is quite important, but they’ll simply recur without seeing the underlying causes.

Let’s tease out how what we’ve seen this week is the result of the way we’ve done economic policy in general, not just individual malfeasance or conflicted structures.

1. Greater concentration

One of the key features of deregulated economies over recent decades is the growing concentration of markets as successful corporations not merely grow organically but acquire competitors and merge with rivals. Last year, Labor MP and economist Andrew Leigh noted the rise in the number of mergers and acquisitions since 1990 that “has led to a substantial increase in market concentration in supermarkets, banking, airlines, meat processing, bottled drinks, telecommunications and a range of other important industries”.

This concentration is sold as enabling greater efficiencies and economies of scale, but the real benefits are in the greater power it gives companies over consumers (and other business that consume their services) and workers. And concentration applies up and down product chains as well. Banks moved into wealth management and financial planning, they said, because it would enable them to offer a one-stop shop for financial products. The real benefit was to steer people looking for financial advice and products to suit their financial circumstances into the banks’ own products. AMP, which was demutualised in 1998, already had its own wealth management arm, AMP Capital, that it could direct its financial advice clients into. For these companies, competition — the idea of letting their own products compete fairly on performance with rival products, and allowing independent financial planners to decide which were best for clients — was anathema; they wanted to control the whole process.

2. A weak regulator

By its own admission, the Australian Securities and Investments Commission (ASIC) has long known the financial planning and wealth management industries were riddled with spivs gouging and giving poor advice to customers. But it was a reluctant regulator — preferring to work with, rather than regulate, the financial industry, fearing litigation with the biggest corporations, reluctant even to impose enforceable undertakings, ignoring complaints from bank victims and ignoring whistleblowers. ASIC — which still boasts of its exchange program with the financial industry — had been captured by the sector it was supposed to regulate, and was focused more on the needs of industry than consumers. Worse, it was crippled by significant funding cuts under both side of politics, but especially under the Abbott government — cuts that have yet to be fully restored.

3. Political protection

Labor came late to the idea of a banking royal commission — it was the Greens who first pushed for a broad inquiry into the financial sector. But Labor in government had implemented the Future of Financial Advice (FOFA) reforms against intense opposition from AMP and the big banks, and the Liberals. The Liberals tried, and nearly succeeded, in gutting the FOFA reforms in 2014, and then protected the banks against a royal commission until late 2017, incurring major political damage along the way. The big four banks, AMP, Macquarie Bank and the sector peak bodies have delivered $3.85 million in donations to the Coalition since 2010, and $2.66 million in donations to Labor, and a former Labor premier heads the Australian Banking Association.

4. ‘Independent reports’

The AMP scandal also featured a perennial of policymaking in recent decades, the independent report that wasn’t. Policymaking in Australia is plagued by reports commissioned by self-interested parties and touted as independent verification of the policy they want adopted. Facing the need to account for its charging of fees for services it had no intention of providing, AMP commissioned law firm Clayton Utz to provide an “independent report” that was anything but, since it was the subject of constant editorial exchanges between AMP, right up to board level, and the firm. The report was then submitted to ASIC as a fully independent work.

Market concentration, learned helplessness by government, the distortion of policymaking by corporate interests, the use of carefully contrived but notionally objective evidence, are all features of how we’ve been doing economic policy under neoliberalism. They’re all features of our policymaking process, not flaws. Only reforms aimed at addressing that process will achieve genuinely systemic change.