- Ripoll hits out at banks' 'corrupt culture and greed at highest levels'
- By Sarah Danckert, Jessica Irvine & Clancy Yeates
- Contributed by: Sime ( 14 articles in 2018 )
Former MP Bernie Ripoll.
The Hayne royal commission has blasted the banking sector as being driven by greed and dishonesty and policed by an ineffective watchdog sparking calls for immediate reform.
Despite several searing observations about banking misconduct during the first four rounds of hearings Commissioner Kenneth Hayne's interim report has stopped short of making any findings or recommendations.
"Hayne has left no doubt as to the corrupt culture and greed that exists in our banks and institutions at the highest levels," said former Labor MP, and prominent reform campaigner, Bernie Ripoll.
"It is about time that those entrusted to hold the most senior of positions and paid so extraordinarily well also hold themselves responsible for what Hayne has painfully uncovered."
Commissioner Hayne said in the report -- which covered hearings into into mortgages and consumer credit, financial planning, small business and lending to regional and rural areas -- that some of the case studies had already brought public condemnation.
This included charging dead people fees for financial advice, the exposing of mortgage fraud rings operating in the big banks and unfair practices in regards to doubt stricken farmers and struggling small business.
All of the big four banks and AMP came in for criticisms by Mr Hayne who also suggested that AMP may have deliberately lied to the corporate watchdog in its reporting of a “fees-for-no-service” scandal.
Commonwealth Bank's planning arm had been slow to tell the regulator about its fee-for-no-service issues and its culture was more focused on "maximising revenue" than serving clients, he said.
The commissioner said it was important to consider why all of the banks had engaged in misconduct.
"Too often, the answer seems to be greed — the pursuit of short-term profit at the expense of basic standards of honesty," he said in his report.
"How else is charging continuing advice fees to the dead to be explained?"
Commissioner Hayne also took aim at the sales-driven culture of the banks and their dishonest behaviour.
“Charging for doing what you do not do is dishonest. Giving advice that does not serve the client’s interests but profits the adviser is equally dishonest,” Commissioner Hayne said.
ASIC has recently estimated that customers have been charged $1 billion in fees for services they did not receive by the big four banks, AMP and other companies.
“No matter whether the motive is called ‘greed’, ‘avarice’ or ‘pursuit of profit’, the conduct ignores basic standards of honesty. Its prevalence and persistence require consideration of the issues of culture, regulation and structure.”
Commissioner Hayne also took aim at the regulator the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA) for failing to act on bank misconduct.
“When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done," the report says.
“The conduct regulator, ASIC, rarely went to court to seek public denunciation of and punishment for misconduct. The prudential regulator, APRA, never went to court."
Releasing the report, Treasurer Josh Frydenberg accused the banks of taking the law into their own hands and holding Parliament, the courts and regulators in contempt.
Mr Frydenberg said the final report may include recommendations and findings.
The final report, to be released in February will include findings and a review of hearings into superannuation and insurance.
Bank shares jumped between 2 per cent and 3 per cent following the release of the report, as investors reacted to lack of findings.
Former competition tsar Allan Fels said the report posed difficult questions about whether sales staff should not receive bonuses at all and whether vertical integration has caused some misconduct.
Treasurer Josh Frydenberg said the culture and conduct of the financial sector have fallen below community standards, with greed and profit coming before honesty and integrity.
“Significant policy challenges lie ahead. Some of it is immediate here and now matters, getting the law enforced and getting the banks to work on their culture and practices," he said.
"This is not going to be resolved by February.”
However, victims said harsher penalties were required.
Mike Wilcox, a 74-year-old solicitor who had his own legal practice but lost his house after Westpac called-in his home loan said:"If you can get up to 15 years for recklessly tampering with strawberries, why can't there be some sort of similar penalty for recklessly abusing their power."
CBA chief executive Matt Comyn said the report was confronting, while NAB chief executive Andrew Thorburn said the bank had to confront Hayne's statement that the banks put ‘profits before people’.”
Shayne Elliott, the chief executive of ANZ said his bank accepted responsibility and was determined to improve, while Westpac chief Brian Hartzer said the bank was "focused on learning from the mistakes of the past and preventing them from happening again."
AMP interim chief executive Mike Wilkins said the wealth manager was accelerating its remediation to affected customers and was committed to improving its business.