FBAA executive director on why the royal commission can succeed where years of inquiries and self-regulation have failed
It’s fair to say that while Australians believe their deposits are secure in Australia’s banking system, they have little confidence in the banks to act ethically and morally in their treatment of customers and in the delivery of products and services. For many years, the banks have made billions in profits each year and these levels are increasing. This would be acceptable to the public if those profits resulted in benefits and savings to customers, however, the perception – and in the main, the reality - has been the opposite.
There seems to have been endless complaints about the behaviour of the banks, and continual investigations into their conduct. Many Australians believe the banks give little back to their customer base and it can be reasonably argued that banks continue to take advantage of their unique position – in that consumers have few options when it comes to banking and lending services – to pour the massive profits back into self-serving interests over being responsible and customer-focused organisations.
There have been investigations into the way banks have provided advice to customers in regards to financial services and financial planning, and we have seen their life insurance products come under scrutiny and regulatory action as well as allegations of price fixing of BBSW interest rates and other misconduct.
There have been many senate inquiries into banking, the new BEAR Regime by the government, FOFA regulations, Financial System Inquiries, and now a royal commission the government didn’t even want. It’s ironic that the banks themselves have written to the government to request this commission in order to “restore trust, respect and confidence" (which could be argued were not there in the first place).
Ironically, the ‘Banking and Finance Oath’ (www.thebfo.org/The-Oath
) was established to do just that. It was meant to help stamp out bad practices in banking and encourage the sector to be ethical, honest and to take responsibility for their own actions.
These issues are not new; they have just been ignored by the banking sector and governments for far too long. The public – and those politicians smart enough to read the will of the people – have said that enough is enough! No more limited inquires, no more deceptive self-regulation, no more pretend commitments; it seems the people believe it’s time for a proper and wider-reaching royal commission.
The banks must unquestionably be responsible for their actions (good and bad), and repair the damage they have caused and be accountable to their customers. The time for saying sorry has passed. It’s time for them to change their behaviour, be more transparent – including in the area of interest rates and fees that are charged to customers – and create a strong and resilient banking sector that has the confidence of all Australians.
The Finance Brokers Association of Australia will prepare to make our submission to the royal commission based on the best interests of finance brokers – who write around 56% of Australian mortgages – and the public at large. We have always been vocal in putting customers first and this is yet another opportunity for our association to be a part of bringing real change to our industry.
Peter White is the executive director of the FBAA. He has worked extensively with government and regulators and has a background in finance spanning almost four decades.