By Monique Stella, Partner
Today at 4.20pm, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry issued its final report following on from the public hearings adjudicated by Commissioner Kenneth Hayne AC QC in August, September and November 2018.
The final report answers some of the questions posed by the interim report issued in 2018 and the public hearings that took place, and has recommended that the regulators’ powers be expanded to oversee the financial sector and change the culture to steer away from industry regulators treating the banks like “clients” in an effort to protect the industry from criticism. The final report has also recommended a new super-regulator to be set up by the government (though independent from the government) to track and assess the performance of ASIC and APRA.
Hayne has suggested that ASIC take a harder approach on enforcement given its historically “soft” approach of reaching negotiated and agreed outcomes with breaches of the rules governing the financial services and banking industries. Hayne has suggested enforceable undertakings and penalties for contraventions of statute.
Hayne has also heavily criticized the financial incentives afforded to those who generate significant sales irrespective of whether the bankers or the brokers complied with the law and proper standards and have continued not to be held accountable.
Interestingly, Westpac, CBA, ANZ and NAB share prices rose today in spite of the fact that it would be judgment day for the banking industry in Australia. CBA in particular has succeeded against all odds, with ASIC banning CBA’s financial planning business CFPL from charging any fees or taking on new customers as recently as earlier this morning. Wealth management companies such as AMP and IOOF were not so lucky to escape with both share prices down.
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