Banks misconduct driven by greed: Hayne
Misconduct by banks and major financial institutions has all too often been driven by greed ahead of basic standards of honesty, banking royal commissioner Kenneth Hayne QC says.
SYDNEY [AAP] - Misconduct by banks and major financial institutions has all too often been driven by greed ahead of basic standards of honesty, banking royal commissioner Kenneth Hayne QC says.
The misconduct has either gone unpunished or the consequences did not meet the seriousness of what had been done, Mr Hayne said in his interim report.
On the issue of why the misconduct happened, Mr Hayne was blunt.
"Too often, the answer seems to be greed - the pursuit of short term profit at the expense of basic standards of honesty.
"How else is charging continuing advice fees to the dead to be explained?"
Mr Hayne said selling services and products has too often become the sole focus of attention for banks and financial services entities.
"Banks searched for their 'share of the customer's wallet'.
"From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales."
Mr Hayne said the conduct regulator ASIC rarely went to court to seek public denunciation of and punishment for misconduct, while the prudential regulator APRA never went to court.
"Much more often than not, when misconduct was revealed, little happened beyond apology from the entity, a drawn out remediation program and protracted negotiation with ASIC of a media release, an infringement notice, or an enforceable undertaking that acknowledged no more than that ASIC had reasonable 'concerns' about the entity's conduct."
Mr Hayne said infringement notices imposed penalties that were immaterial for the large banks.
Enforceable undertakings might require a 'community benefit payment', but the amount was far less than the penalty that ASIC could properly have asked a court to impose, he said.
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