Written by: Lucinda Ou-Yang
The establishment of a Banking Royal Commission on 14 December 2016 by the Governor General, Peter Cosgrove, came as a long-awaited investigation into the financial services sector. Over the past decades, there has been ongoing speculation about the corruption within Australia’s banking, superannuation and insurance institutions. This banking enquiry is critical to eliminating the ongoing engagement in misconduct and risks that individuals face in the financial sector, to ensure all Australians are treated fairly.
Over the past month, evidence and submissions have revealed evidence of appalling behaviour of various financial institutions. These include alleged bribery, forged documents and misleading information given to customers. For instance, AMP admitting to lying to Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), about charging fees to clients who have died. Although AMP’s chief executive has announced he is standing down from the company immediately, this case was the first of many discoveries that financial institutions have been operating dishonestly and taking advantage of customers for years.
Many proposals of reform have been suggested to combat the misconduct that have been found in the financial industry. This includes legislative reform to ensure that financial products sold by institutions are more suitable for customers, monitoring that products deliver what they promise and enhancing the powers of ASIC to increase its surveillance activities. Nevertheless, a cultural reform for financial firms is also needed. Current regulatory settings have not overcome misconduct in the area because of the toxic culture of complacency in undertaking illegal actions without being penalised. Currently, financial institutions are engaging in behaviour falling below community standards and expectations, have delays or failures to report breaches to ASIC, resistance to compensate consumers for misconduct and consistently fail to meet legal obligations. Therefore, there is also an overwhelming need for legislative changes to address cultural reform, by encouraging alterations to corporate governance frameworks to promote corporate accountability.
For more information, please visit: http://www.abc.net.au/news/story-streams/banking-royal-commission/