05 Feb 2019
A key government-appointed inquiry into misconduct and other issues within the Australian banking sector has highlighted a need to reform culture within the industry, and revealed issues of ‘greed’ within industry, where the drive for profit supersedes customer care.
In its final report published on Monday, the Royal Commission said that: “In almost every case, the conduct in issue was driven not only by the relevant entity’s pursuit of profit but also by individuals’ pursuit of gain, whether in the form of remuneration for the individual or profit for the individual’s business.
“Providing a service to customers was relegated to second place. Sales became all important. Those who dealt with customers became sellers.”
Another issue of concern is that bonuses and reward schemes measure sales and profit, and not compliance with the law.
“Rewarding misconduct is wrong … incentives have been offered, and rewards have been paid, regardless of whether the sale was made, or profit derived, in accordance with law. Rewards have been paid regardless of whether the person rewarded should have done what they did,” the report explained.
In addition, too often, ‘financial services entities that broke the law were not properly held to account.’
“The Australian community expects, and is entitled to expect, that if an entity breaks the law and causes damage to customers, it will compensate those affected customers. But the community also expects that financial services entities that break the law will be held to account. “
Anna Bligh, head of the Australian Banking Association, said banks “accept full responsibility for these failings and they know that they must now change to ensure that this never happens again,” according to Reuters.
“Banks are determined to learn the lessons, to fix the problems and to make it right.”
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