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Banks misconduct driven by greed: Hayne

AAP  |  28 Sep 2018Text size  Decrease  Increase  |  
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SYDNEY [AAP] - Misconduct by banks and major financial institutions has all too often been driven by greed ahead of basic standards of honesty, banking royal commissioner Kenneth Hayne QC says.

The misconduct has either gone unpunished or the consequences did not meet the seriousness of what had been done, Mr Hayne said in his interim report.

On the issue of why the misconduct happened, Mr Hayne was blunt.

"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?"

 

Mr Hayne said selling services and products has too often become the sole focus of attention for banks and financial services entities.

"Banks searched for their 'share of the customer's wallet'.

"From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales."

Mr Hayne said the conduct regulator ASIC rarely went to court to seek public denunciation of and punishment for misconduct, while the prudential regulator APRA 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 that acknowledged no more than that ASIC had reasonable 'concerns' about the entity's conduct."

Mr Hayne said infringement notices imposed penalties that were immaterial for the large banks.

Enforceable undertakings might require a 'community benefit payment', but the amount was far less than the penalty that ASIC could properly have asked a court to impose, he said.

 

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© 2018 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

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