The Standard

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Commissioner Kenneth Hayne in his own words

by Lewis Panther SA FIN | 21 Feb 2019
Commentators have written thousands of words analysing the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Kenneth Hayne’s 76 recommendations for the sector have been both highly-praised and roundly criticised.

FINSIA’s long held view is that professionalism and personal accountability through higher standards of conduct and competency is the bedrock solution to the trust deficit.

That view has not wavered. In fact, many of the statements made by the former High Court judge simply reinforce that view. Here, in no particular order, are some of the Commissioner’s thought-provoking comments.

Final report 


"Failings of organisational culture, governance arrangements and remuneration systems lie at the heart of much of the misconduct examined in this commission."

“Culture, governance and remuneration march together. Improvements in one area will reinforce improvements in others; inaction in one area will undermine progress in others."

Broken laws, broken trust:

“Very often, the conduct has broken the law. And if it has not broken the law, the conduct has fallen short of the kind of behaviour the community not only expects of financial services entities but is also entitled to expect.

“The community recognises, and the community expects its regulators to recognise …. having a wrongdoer compensate those harmed is one thing; holding wrongdoers to account is another.”


"In almost every case, the conduct in issue was driven not only by the relevant entity's pursuit of profit but also by individuals' pursuit of gain, whether in the form of remuneration for the individual or profit for the individual's business. Providing a service to customers was relegated to second place.”

“Sales became all important. Those who dealt with customers became sellers.”

"Rewarding misconduct is wrong. Yet incentive, bonus and commission schemes throughout the financial services industry have measured sales and profit, but not compliance with the law and proper standards. Incentives have been offered, and rewards have been paid, regardless of whether the sale was made, or profit derived, in accordance with law.

Power imbalance:

"There was a marked imbalance of power and knowledge between those providing the product or service and those acquiring it."

Brokers and intermediaries:

"An intermediary who seeks to 'stand in more than one canoe' cannot. Duty (to client) and (self) interest pull in opposite directions. "

Crime and punishment:

"Misconduct will be deterred only if entities believe that misconduct will be detected, denounced and justly punished. Misconduct is not deterred by requiring those who are found to have done wrong to do no more than pay compensation. And wrongdoing is not denounced by issuing a media release."

On saying sorry:

"Saying sorry and promising not to do it again has not prevented recurrence. The time has come to decide what is to be done in response to what has happened. The financial services industry is too important to the economy of the nation to allow what has happened in the past to continue or to happen again."


"Everything that is said in this report is to be understood in the light of that one undeniable fact: it is those who engaged in misconduct who are responsible for what they did and for the consequences that followed.

“Because it is the entities, their boards and senior executives who bear primary responsibility for what has happened, close attention must be given to their culture, their governance and their remuneration practices.”

"Industry codes are expressed as promises made by industry participants. If industry codes are to be more than public relations puffs, the promises made must be made seriously.

Interim report:

"Why did it happen? Too often, the answer seems to be greed - the pursuit of short-term profit at the expense of basic standards of honesty. How else is charging continuing advice fees to the dead to be explained?" - Commissioner Kenneth Hayne, said to sum up what he felt for the interim report. 

“Selling became their focus of attention. Too often it became the sole focus of attention. From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales.”

“The customer’s ‘needs’ are formed by reference to what the entity has to sell. And often it is the entity’s representative that tells the customers what he or she needs.”

Trail commissions:

"The chief value of trail commissions to the recipient, to put it bluntly, is that they are money for nothing," he wrote.
"Why should a broker, whose work is complete when the loan is arranged, continue to benefit from the loan for years to come?”


“ASIC has acknowledged that its enforcement culture must change. It should be given time to demonstrate that changes can be made and to demonstrate that, once made, the changes are durable." 


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