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By SYBILLA GROSS
Banking Royal Commissioner Kenneth Hayne did not go far enough in recommending tougher responses to persistent misconduct in the financial services sector, according to expert members of a Melbourne Press Club forum on the inquiry.
Members of the March 1 panel were former ACCC chairman Professor Allan Fels, award-winning finance journalist Adele Ferguson and Professor Ian Ramsay, who headed the federal review the financial system’s external dispute resolution and complaints framework.
Professor Fels said that while Commissioner Hayne deserved accolades for his “radical exposure” of unethical conduct in the banking industry, there was a degree of superficiality in the ultimate recommendations.
“The Royal Commission was not good on the whole process of dealing with the difficult policy problems,” he said.
Remediation, separation of the banks’ selling activities from their products and remuneration were all areas that were inadequately addressed, he said.
Ramsay said another pressing matter raised in the report was ASIC’s woeful enforcement practices.
He said the regulator had a strong proclivity not to pursue criminal action against banking misconduct. According to his own five-year study of the agency, prosecution was enforced only about 10 per cent of the time and even then it was “soft enforcement”.
Ramsay noted that the persistent and accepted lying to ASIC on behalf of the big financial firms (famously demonstrated when the head of financial advice at AMP was questioned on the matter) was indicative of ASIC’s failures as an enforcement body.
“Why does one of the major financial firms in the country have such an attitude? Is it possibly because of a lack of respect for the regulator?” he said.
Adele Ferguson also expressed disappointment with the Hayne recommendations, saying they lacked the teeth for real policy change.
She said there should have been more emphasis on the actions of individual players, beyond the direct criticisms of National Australia Bank chief executive Andrew Thorburn and chairman Ken Henry that led to their resignations.
“A few more names would have sent a really clear message to boards, and I think that’s the way we get change, through scaring them, quite frankly,” she said.
Ferguson also emphasised the need to address a culture of greed in the sector, with top bankers drawing exorbitant bonuses just for doing their jobs.