Error
  • JUser: :_load: Unable to load user with ID: 82
Menu
Cuzz Media

Cuzz Media

Cuzz Media is part of t...

NAB VICTIM

NAB VICTIM

In late 2008 we became vi...

Banking In Australia Today

Banking In Australia Today

Visit Banking in Austra...

Donate Please

Donate Please

We need your support. ...

Prev Next

APRA chairman Wayne Byres dismisses 'bad apples' defence

 "I think there's something more significant here that the industry needs to look at, and I think the industry is looking at it," says APRA chairman Wayne Byres. Photo: Louise Kennerley "I think there's something more significant here that the industry needs to look at, and I think the industry is looking at it," says APRA chairman Wayne Byres. Photo: Louise Kennerley
Australia's powerful financial regulator is urging the industry to take decisive action to address the escalating problems caused by serious misconduct, dismissing attempts to blame poor behaviour towards customers on "bad apples".

As the government eyes further reforms in financial advice, Australian Prudential Regulation Authority chairman Wayne Byres on Wednesday said there was a need to make sure the sector's culture and incentives for staff were better aligned with customers' interests.

While he did not name specific examples, the comments are the latest sign of pressure on big banks over misconduct, after financial advice scandals  rocked some of the country's biggest lenders in recent months.

It came as investors heavily sold off shares in Commonwealth Bank, Westpac, ANZ Bank and National Australia Bank after Mr Byres also signalled APRA would act "sooner rather than later" to implement the financial system inquiry's call for the big four banks and Macquarie to hold higher capital against mortgages, a move that could potentially depress returns.

Speaking at the The Australian Financial Review Banking and Wealth Summit,  Mr Byres made it clear there was more to do to ensure the financial services industry served the interests of customers.

"While we might not have had the same really egregious episodes or egregious instances of poor culture, poor incentives, poor behaviour that have come to light in some other financial centres, neither are we completely free of those issues," Mr Byres said in Sydney.

"I think some of the things that have emerged in more recent times, it's very easy to dismiss them as an isolated instance here and a bad apple there. I think there's something more significant here that the industry needs to look at, and I think the industry is looking at it," he said.

He said APRA had been engaging closely with boards in recent years and there was a "great deal of attention" being placed on culture and behaviour within financial institutions. But he said there was more work to be done, singling out culture and remuneration as areas of concern.

"A positive culture will be best encouraged when incentives require staff to compete by genuinely looking after the long-term interests of customers. Unfortunately, available evidence suggests there is further to go here," he said.

Assistant Treasurer Josh Frydenberg also acknowledged the public's loss of confidence in the planning sector, saying the government expects to have settled on "transformational" reforms by the middle of this year.

"There has been a crisis of confidence by the general public in the financial planning sector, and that is a flow-on effect from the advice and product failures we have seen recently," Mr Frydenberg told the summit on Wednesday.

Mr Frydenberg is in consultation with the industry, and said possibilities for reform could include introducing an entrance exam, a professional training year, or a code of ethics for the industry.

The life insurance industry is also facing pressure to reduce conflicts of interest, and AMP on Wednesdarejectsy voluntarily said it would reduce the advance commissions paid to advisers.

While the run of scandals in financial advice has fuelled calls for a royal commission, panellists at the summit were unanimous in saying this was not necessary.

Senator David Fawcett, who chairs the Parliamentary Joint Committee on Corporations and Financial Services, said heightened attention on the industry had seen it make "huge progress"  but there was a long way to go to ensure culture and behaviour adhered to a higher professional standard.

He said the bipartisan approach had given the planning and advice industry "some stability of direction".

Shadow financial services minister Bernie Ripoll agreed that a royal commission wasn't warranted because they were often expensive and complex.

"They should only be instituted at the point of no return … other inquiries put us on the right path," he said, referring to bolstering adviser standards and instilling the right culture at financial services firms. "We are actually on the right road. I think we have along way to go, I don't think we are there yet ... We have some lofty goals."

Reserve Bank of Australia governor Glenn Stevens aired concerns similar  Mr Byres' on Tuesday, telling the summit that  Australia had not been immune from misconduct scandals, which have been a prominent feature of the industry overseas.

Mr Stevens also highlighted the role of remuneration and poor culture, saying "the root causes seem to include distorted incentives coupled with an erosion of a culture that placed great store on acting in a trustworthy way".

APRA and the RBA's commentary on misconduct within banks come after Commonwealth Bank chief Ian Narev,  Macquarie Group's Nicholas Moore, National Australia Bank's Andrew Thorburn, and ANZ deputy chief executive Graham Hodges were forced to confront their banks' past wrongdoing in financial planning before a high-stakes Senate hearing last week.

With each bank paying out millions of dollars in compensation to advice customers, the executives conceded there was more to be done for the industry to rebuild the public's confidence.

Author: Clancy Yeates
Source: The Age

Last modified onFriday, 01 May 2015 06:59

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.

back to top

News

Major Topics

Helpful Resources

Socialize

About Us