Editor's Letter: When no one is watching

There's no downside to increased accountability in financial services

By Otiena Ellwand

24 Apr 2018

Trust, transparency and accountability should be the guiding forces for anyone in financial services, but that is unfortunately not the picture that took shape following the first two weeks of public hearings of the banking royal commission.

From 13 to 23 March, bank executives filed past the news photographers on their way into the Melbourne courthouse, where they endured an exhaustive examination at the hands of senior counsel Rowena Orr. Breaches were revealed, banks were criticised, brokers were blamed, and fingers were pointed every whcih way.

As the blame gets shifted, so too do the facts. Who is responsible for what, and who should face the consequences? Will brokers bear the brunt of it as the smaller, less powerful industry compared to the banks?

As one industry observer noted, many of the things that have come out of the royal commission aren’t a surprise. They’d already been subject to public case study. The real concern comes from the complacent banking culture from which they arose, which allowed profits to come before customers.

The silver lining is that more accountability is being demanded, and that will force bankers and brokers to do better and be better for customers

What bubbles up to the surface from all of this is that the lack of trust in financial services is pervasive, something ASIC chairman James Shipton spoke about recently at the regulator’s annual forum. “The sustained degradation in trust in the people in finance will eventually start to degrade trust in the financial infrastructure itself. And this would be catastrophic,” Shipton said in his speech.

To rebuild trust, one must earn it by being competent, caring and ethical, especially when no one is watching, he said.

“I am suggesting that we need greater levels of professionalism in finance,” Shipton said, recognising that the regulators aren’t exempt from this either.

The silver lining is that more accountability is being demanded, and that will force bankers and brokers to do better and be better for customers. There is no downside to that, but it does mean there’s a lot of work for the industry to do to lift standards and rebuild people’s trust in the importance of financial services and the integral service brokers provide.