The common view of financial services professionals being fat cats, lining their pockets with money, is one that has stuck around. From insurance providers to banks, there's plenty to dislike about the current system.
Which is why the Australian Securities and Investment Commission (our country's corporate regulator) is planning to come down hard on these kinds of companies that fail the culture test.
Bank directors who fail in their duties could become criminally responsible for their actions
After all, from finding an attractive home loan package to looking after customers' retirement savings in superannuation, everyday Australians rely on the financial services sector for help. The view of many – including, it seems, ASIC – is that the "sex, drugs and alcohol" culture that is constantly in the headlines does not bring the best outcomes for Aussie families.
To try and bring standards up in the realm of financial services, ASIC is pushing for the Commonwealth Criminal Code to be extended to include financial services as part of corporate law. In particular, the Commission says it wants to see businesses that offer "vertically integrated" services (that is, offer a range of help from superannuation to investment administration) be more responsible.
ASIC Chairman Greg Medcraft speaking at the #ASICForum on why culture matters https://t.co/cmfKMVyxBo
— ASIC Media (@asicmedia) 22 March 2016
In a nutshell, ASIC Chairman Greg Medcraft says bank directors and other similar so-called professionals who fail in their duties could become criminally responsible for their actions, according to the Sydney Morning Herald – and rightly so!
We only need to look at some of the mind-blowing whistle-blower testimony against CommInsure last month to see how important this change is.
Learning from the very recent past
The Commonwealth Bank's life insurance arm came under severe scrutiny for failing their policyholders by delaying treatment and bullying doctors into changing or deleting medical records. Essentially it meant patients would die before they could make a claim, CommInsure's former Chief Medical Officer Benjamin Koh alleged.
Late last month, Assistant Treasurer Kelly O'Dwyer said the reports were "very serious", and welcomed a fresh look at how unscrupulous bank directors are put to task for their horrible lapses in judgement.
Of course, the ASIC decision is not just for Commonwealth Bank, with a number of shady business practices conducted by other big banks recently coming to light.
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Is it enough?
ASIC's plan is certainly not bad news, but is it enough, or does a wider change need to happen to put every bank's customers first – not wealthy shareholders and greedy bank managers? After all, this new plan is to force some bank directors to change their ways, rather than encouraging those in the wrong to have a change of heart.
If you think you can do better than your bank, you're right! From lower interest rates on home loans to retirement planning that works for you, customer-owned banking offers a very real solution.
Contact CAPE and we're confident you'll notice the difference.
