Your InFinance Publication

FINSIA’s InFinance keeps you up-to-date and in-the-know. 

Hearings at round four of the Royal Commission again proved industry professionalisation is key to rebuilding consumer trust

by Lewis Panther | 06 Jul 2018

If FINSIA’s proposals — including professional training, registration and robust disciplinary processes applying to all bankers — were implemented, it’s hard to envisage the poor consumer outcomes revealed at hearings in Brisbane and Darwin this past fortnight.

The first week in Brisbane heard how farming families who had not defaulted and had never missed loan payments were forced off properties because of what can only be summed up as a shift in policy by banks. 

Stories of how Aboriginal and Torres Strait Islander people were targeted by pushy insurance companies leapt from the business to front pages in week two from Darwin, which is always a sign of controversy.

Aboriginal Community Benefit Fund used indigenous imagery in its advertising to promote its affinity with the community, yet there were no links at all. ACBF failed to comply with ASIC recommendations for years before ending up in Federal Court.

As ACBF’s long track record of targeting poor people who place great emphasis on funerals was picked apart by assisting counsel Rowena Orr QC it became clear that the CEO of the business got the job because his father and the owner banked together.

That alone would exclude him from running such a business under FINSIA’s guidelines, which emphasise the conduct and competence necessary to hold critical managerial roles.

As our submission to the Royal Commission says: “The first step is the development and introduction of standards of conduct and competence for defined critical roles in the industry.

“These standards must be explicit and set out the minimum competencies required for key roles in the industry at every level.

“Industry-led standards, supplemented by regulation where required, is the best approach. 

“Ultimately support for professional aspiration and a professional culture will be far more successful than prescriptive regulation and a compliance mindset. 

“Any standards established by the industry must go meaningfully beyond regulatory minimums and be supported by organisational culture and strong disciplinary processes.”

The fact that it had ignored ASIC for years would also be red-flagged under FINSIA’s proposals, which says there must be: “A national, publicly available register that list any investigations or sanctions against a member.”

Our submission says there should also be a “requirement that all individuals obtain an annual Statement of Professional Standing confirming their membership standing, up to date CPD requirements and the status of any complaints or investigations against them.”

FINSIA’s belief that it is “critical … customers’ interests are considered first and are written in simple language so that they are easy for customers to understand” was completely flouted by several other examples of bad behaviour at the hearings.

It heard how ASIC found 30 per cent of calls from another company selling funeral insurance to indigenous people that was involved "inappropriate sales tactics".

The regulator’s other concerns included a recruitment policy which sought to target "money driven individuals" by highlighting uncapped commissions with no mention of consumer outcomes.

Let’s Insure staff could win a Vespa or a Sunshine Coast cruise as incentives and were told to use “fear of loss” as a way to drive sales.

It’s not something FINSIA, which wants to see an emphasis on giving sound and prudent financial advice, would ever strive for. As FINSIA’s three identified goals say, it wants to: 

  • Drive an aspiration for conduct at a higher level of integrity than regulatory compliance to bolster the industry assets of trust and reputation.
  • Raise skill levels to improve customer outcomes and support the tradition of prudent stewardship of customers’ money.
  • Attract and retain the right talent to work in banking through the provision of a professional pathway.

FINSIA members who attended our first Town Hall in Brisbane spoke of their disappointment at being tarnished by the actions of those who have come before the Royal Commission.

Members acknowledged that the banking and financial services industry needed to move away from a bonus-driven culture driven by shareholders’ short-term financial expectations to one where community focussed outcomes had to be a priority.

The fact that employees in other industries work just as hard without bonuses was highlighted, using the example of a doctor to show why people can be driven by professionalism during the discussions.

There was also an overall feeling that regulators needed to do more to weed out bad apples and use the “fit and proper” tools to eliminate people whose behaviour did not meet up to the standards expected of an industry trying to rebuild trust.




Comments

Share this