Financial Services providers were scrutinized for their lending practices, remuneration models and misconduct handling procedures at the Australian Financial Review’s Banking & Wealth Summit this week.
The Summit analysed a widening ‘trust deficit’ in the sector and explored how industry could resolve the issue to avoid more complex and intrusive regulation.
Wayne Byres, Chairman of the prudential regulator APRA, questioned the legality of paying mortgage brokers according to the size of the loans they administer; and called for tighter punishments for senior executives who acted irresponsibly and engaged in excessive risk.
The “carrots are large and the sticks are brittle”, he commented in reference to the emphasis many banks place on reward, rather than penalty.
Among the imperatives identified by ASIC Chair James Shipton was a better culture of disclosure and a willingness to improve the speed of reporting legal breaches.
He urged industry to build a more cooperative and open relationship with regulators and to obey not only the law, but their own moral sentiments.
“It’s not just the merit of the obligation but the spirit of that obligation” that banks need to adopt if they are to truly raise standards, he told the audience.
Industry perspectives were heard from the likes of Westpac CEO, Brian Hartzer and NAB Chief Customer Officer – Corporate & Institutional Banking, The Hon Mike Baird.
Hartzer argued that it was essential for Westpac to stay true to its core purpose of helping the Australian economy to prosper, but agreed that there need not be a trade-off between commercial and customer needs. “At a minimum, customers should know what they are signing up for”, he said.
More than 300 senior executives turned out for the event, which featured insights from Treasurer Scott Morrison, Former Prime Minister Paul Keating and ABA CEO Anna Bligh.
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