The banking royal commissioner wants financial services laws obeyed and enforced, rather than bringing in new laws. A royal commission wants financial institutions punished for their greed-driven misconduct, rather than breaches of the law being treated as no more than bargaining chips to get compensation for customers.
Banking royal commissioner Kenneth Hayne QC wants financial services laws obeyed and enforced by strong regulators, rather than bringing in new laws.
"Passing some new law to say, again, 'do not do that' would add an extra layer of legal complexity to an already complex regulatory regime," Mr Hayne said in his interim report.
"What would that gain?"
Mr Hayne's interim report found widespread misconduct by financial services entities has all too often been driven by greed.
He said the banks have gone to the edge of what is permitted and beyond that limit in the pursuit of profit.
"And they have gone beyond the limit because they can and because they profit from the misconduct that is described in this report," he said.
Mr Hayne slammed the regulators ASIC and APRA for failing to mark and enforce the bounds of permissible behaviour, saying the misconduct either went unpunished or the consequences did not meet the seriousness of what occurred.
Mr Hayne criticised ASIC for what he said seemed to be a deeply entrenched culture of negotiating outcomes rather than insisting upon public denunciation of and punishment for wrongdoing.
He said breaches of the criminal offence and civil penalty provisions of financial services laws are not to be dismissed as "just a breach of those laws", as if they are some less important form of law.
Compensation for consumers was vitally important but not the only relevant consideration, he said.
"Contraventions of law are not to be treated as no more than bargaining chips to procure agreement to remediate customers."
If ASIC had a reasonable prospect of proving a contravention of the law, the starting point must be that a court determines the consequences, Mr Hayne said.
"Too often, entities have been treated in ways that would allow them to think that they, not ASIC, not the parliament, not the courts, will decide when and how the law will be obeyed or the consequences of breach remedied."
ASIC chair James Shipton noted the interim report's serious and important observations of ASIC's role as a regulator.
"ASIC will continue to assist the royal commission and to work with the government, the parliament and other regulators to build a stronger legislative, enforcement and regulatory framework with tougher penalties," he said.
In his report, Mr Hayne rejected banks and other financial services entities' attempts to dismiss financial advice scandals as being isolated incidents.
"That generally similar conduct occurred in all of the major entities suggests that the conduct cannot be explained as 'a few bad apples'."This article was first published by https://www.sbs.com.au/