The hopes expressed in last week's Hedge Clippings - namely that the Hayne Royal Commission's final report due next February won't focus on increasing regulations, but will rather insist on accountability for poor - and possibly criminal behaviour - seem to have been given a good chance of coming to pass if the interim report is anything to go by.

Whilst we have to admit to only skimming some sections of the 1,000 page, three-volume interim report released last Friday, we have read enough to continue to be significantly impressed by its overall direction, and to see no reason we won't be equally impressed by the final version. Commissioner Hayne clearly recognises what the underlying problems are - namely conflict of interest, greed and regulators who need to act to prosecute - and prosecute hard from the top down - rather than to add ever increasing regulations on the industry.

If anything, removing existing carve-outs such as grandfathered commissions would be more useful than adding more laws.

Apart from the Commission's ability to put wrongdoers firmly in the spotlight, what the HRC has exposed is the previous difficulty encountered by customers when bringing their grievances to the attention of the regulators. We would expect the final report to also include recommendations regarding beefing up the FOS, or simplifying and speeding up the processes around it.

In spite of calls by the Federal Opposition to extend the HRC and the work of Commissioner Hayne AC QC, and his team, it sounds as if he'd rather finish it up as scheduled next February, and let the Government (hopefully) get on with the task of implementation of the recommendations.  Simply extending, and presumably finding more of the same, won't add to what's been uncovered already.

Elsewhere this week the US 10 Year bond rate reached multi-year highs as the Fed tightened again, with expectations of a further one or two moves over the balance of this year. The US economy is surging, and with unemployment sub 4% the question is when will inflation kick in, and at what level will 10-year bonds spoil the equity party? Anecdotally most fund managers we hear from believe a correction is overdue, but none are quite prepared to say when.

Anyone who has followed the goings on at the Royal Commission into Financial Services over the past six months or so won't have been surprised at the damning indictment of nearly every aspect of the banking, financial advice, mortgage broking or insurance sectors when Mr Hayne's Interim Report was delivered to the government earlier this afternoon. In fact unless you've been on the moon over the past six months you would have had a pretty good idea of the report's conclusion - the sector has been loaded towards the industry participant - the big end of town - and against the consumer.

It seems pointless to try to cover all but the overall gist of the lengthy 3 volume interim report. The real issue going forward is to what extent the politicians will actually follow through with the Interim Report's recommendations, even before the final version is delivered early next year. Early comments from the new Treasurer, Josh Frydenberg suggests he will take firm action, but without being overly cynical, he is a politician after all.  Maybe the upcoming election will ensure stern words are followed by firm action.

Meanwhile, untold damage been done to the standing and reputation of the financial services sector in the eyes of the consumer, although to many it merely confirmed what they perhaps already suspected. What it did fully expose was the massive conflict of interest between corporate profit and personal gain on one hand, and the best - or at least a fair and reasonable - outcome for the customer on the other.

Actual recommendations will no doubt be the subject of the final report, after Mr Hayne has grilled the CEOs of the various banks and other institutions, which we presume is due to take place in Round 7 of the public hearings scheduled for the last two weeks of November, under the overall title of "policy questions arising from the first six rounds". Whilst to date it is only the CEO and chair of AMP who have felt the full fallout of their time in front of the HRC, the bottom line is that responsibility for corporate culture ultimately lies with the board.

It is obvious that board and therefore company cultures over the last couple of decades have been slanted strongly towards the pursuit of corporate profit, achieved through an increased market share in the now well understood, but flawed concept of vertical integration, coupled with a system of commissions and bonuses which have created the massive conflicts of interest.

Where the balance lies between corporate profit, looking after investors, and doing the right thing by customers is difficult to judge, and probably even more difficult to legislate for. We just hope that the final outcome of Commissioner Hayne's report - be it the interim or final version - will not result in additional layers of excessive regulation, but will result in a clear delineation which allows criminal prosecution of the guilty parties where, and when it occurs.