The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has highlighted a toxic sales culture and a failure to regulate wrongdoing as major issues in the interim report handed down by Commissioner Kenneth Hayne.
The report flagged issues with fees charged for little or no service provided as deeply problematic, including questioning how it reached a point where fees were charged to deceased people.
“Too often, the answer seems to be greed – the pursuit of short-term profit at the expense of basic standards of honesty,” Hayne wrote in the report. “How else is charging continuing advice fees to the dead to be explained?”
Hayne said that a culture clearly existed where profits were put first and staff performance at every level was based on sales and profit.
The report also suggested that regulators had failed to act sufficiently to sanction wrongdoers.
“When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done,” Hayne wrote.
He found that while laws already existed prohibiting much of the problematic behaviour, most especially in requirements that Australian Financial Services Licensees provide services “efficiently, honestly, and fairly”, the answer to reform may not lie in extensive regulatory change but rather simplification of laws and better enforcement.
