Australia’s financial institutions need to wake up to the fact they’re dealing with “other people’s money”, the head of the country’s financial watchdog says.
Speaking at the 24th ASIC Annual Forum in Sydney, ASIC chairman James Shipton reminded a record audience of almost 1,000 delegates from the financial sector that the job of Australia’s finance industry was to serve consumers and that it was obligated to be efficient, honest and fair in providing that service.
“Financial institutions must rise to this challenge,” Shipton said. “We do not want to see resistance and reluctance to the job that the community expects us to do as a conduct regulator and corporations law enforcer.”
Delivering his closing remarks as he wrapped up the forum on Monday, Shipton went on to say that Australia’s financial services industry needed to adopt the concept of ‘first, do no harm’ when it came to the services it offered consumers.
In what he dubbed a ‘fairness challenge’, Shipton said financial sector workers should ask themselves, ‘Is this practice or product going to cause harm, be detrimental or have a negative consequence?’.
“I am not convinced this level of questioning and procedural discipline has been applied by the financial industry when developing, and reviewing, business practices and financial products,” he added.
Shipton also stressed the importance of a financial system that not only dealt with consumers fairly, but was professional and fully inclusive, catering for “every segment of the community”, which he said would help to rebuild the country’s trust in the sector, particularly following the findings earlier this year of the banking royal commission that delivered some damning conclusions about banks, mortgage brokers, investment houses, superannuation funds and other companies.
“We need a financial system that not only serves every segment of the community but also is one where those who work in it feel proud of being a part of it,” Shipton said. “Proud because there is a broader community purpose to what they do and proud because they are professional in how they do it.
“If we can achieve this then we will have gone a long way for Australians to have trust and confidence in the financial system- something that is not only what Australians deserve but what is their right.”
The Australian Securities and Investments Commission, as ASIC is formally known, was itself censured by Kenneth Hayne, the QC who chaired the Royal Commission into Misconduct into the Banking, Superannuation and Financial Services Industry.
Hayne’s findings included accusations that ASIC and fellow regulator, the Australian Prudential Regulation Authority, weren’t sufficiently aggressive in pursuing financial institutions involved in wrongdoing through legal avenues and were too keen to accept institutions’ undertakings to clean up their act.
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