Aussie consumers have been sacrificed at the altar of corporate greed.
That’s the finding from the Royal Commission into the banking and financial services sector’s latest report.
In the report released today, commissioner Kenneth Hayne said banks and financial services have allowed selling to become their sole focus of attention, seeking “their share of the customer’s wallet.”
“From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales,” he said.
“Why did it happen? Too often, the answer seems to be greed – the pursuit of short term profit at the expense of basic standards of honesty. How else is charging continuing advice fees to the dead to be explained?”
He said financial services’ misconduct has also largely gone unchallenged by a corporate regulator, ASIC, which rarely went to court and preferred to achieve a negotiated result, and a prudential regulator, APRA, which never went to court.
“Infringement notices imposed penalties that were immaterial for the large banks,” he said.
“Enforceable undertakings might require a ‘community benefit payment’, but the amount was far less than the penalty that ASIC could properly have asked a court to impose.”
He said the questions for the government and the sector going forward are whether new laws are needed, or whether the current laws need strengthening, changing or simplifying.
Commenting on the interim report, Treasurer Josh Frydenberg said it’s clear the sector’s conduct is “well below the standard the Australian people expect and deserve.”
“[It] shines a very bright light on the poor behaviour of our financial sector. Banks and other financial institutions have put put profits before people. I repeat that. Banks and other financial institutions have put put profits before people.”
Frydenberg noted that almost every case study and practice identified in the report can be traced back to monetary gain.
He said the condemned conduct was in many cases “contrary to the law” and said the government will “take the action necessary to restore the public’s confidence and trust in our financial services system.”
The Royal Commission will release its final report next year.
More to come.