By guest contributor, Rafiyat Husnain, analyst, Atchison Consultants
The Royal Commission’s brief is to examine misconduct in the banking, superannuation and financial services industry. It has brought about significant public attention and criticism of unsound practices which had not been fully disclosed to regulators until this year. The Interim Report discussed the issues surrounding the Commission’s purpose and the reasoning behind its actions during the period under investigation.
Financial services entities are in the business of selling products and services for fees and/or commissions. The Commission exposed a willingness which had emerged in the last decade to over-ride client centricity with a pure profit-making structure. The motivation for monetary rewards drove these institutions to take part in a level of misconduct that was either not noticed or not addressed by regulators, including ASIC and APRA. Each instance of misconduct presented was waived by these regulatory bodies with an immaterial consequence to the financial services entity that would not be anywhere near as much as what the law may have justified.
The purpose of the Royal Commission has been to anticipate or actively respond to newly-revealed information with a series of public announcements and disclosures. These announcements are in relation to the remediation or refund programs for clients affected by an entity’s poor conduct. The announcements are also bringing about a standard of transparency to the public regarding fundamental changes in the industry, including the sale of whole divisions of a business, or a concentrated regulatory focus on particular activities and changes in industry structure or remuneration.