Australia’s banks and financial services companies were motivated by greed and regulators failed in their duty to properly punish misconduct, an interim report issued by a public inquiry into the industry has found.
However, the report does not recommend introducing a swathe of new legislation, arguing this would add an extra layer of complexity to an already complex regulatory regime. Rather, it suggests existing laws may need to be simplified and enforced differently in the future.
“Too often, the answer seems to be greed – the pursuit of short term profit at the expense of basic standards of honesty,” says the executive summary of the 1,000 page report.
“How else is charging continuing advice fees to the dead to be explained?”
Banks shares rallied on the ASX with Commonwealth Bank of Australia up more than 2 per cent at A$71.67, ANZ shares up 2 per cent at A$28.35, NAB shares up 2 per cent at A$27.96 and Westpac shares up 1.6 per cent at A$28.08 shortly before the close.
The report slams regulators for failing to stand up to the banks and financial institutions they were overseeing when wrongdoing was revealed. The Australian Securities and Investments Commission rarely went to court to seek public denunciation of and punishment for misconduct while the prudential regulator never went to court.
“Much more often than not when misconduct was revealed, little happened beyond apology from the entity, a drawn out remediation program and protracted negotiation with Asic of a media release, an infringement notice, or an enforceable undertaking,” says the report.
The report does not provide a comprehensive list of recommendations but rather raises a large number of questions that have been raised during the public hearings so far. A further round of public hearings is due to take place in coming months with a final report due to published next year.