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February 28th, 2019
Australia’s big banks and financial institutions have broken the law and put profits before people, according to the final report of the banking system that warns “saying sorry and promising not to do it again” will not prevent history from being repeated.
The damning final report of the royal commission into the banking sector has made 24 referrals for misconduct involving potential civil and criminal penalties for big names including the Commonwealth Bank, NAB, AMP and ANZ. Only Westpac escapes Commissioner Kenneth Hayne’s calls for referrals over the breaches.
In some cases, criminal charges could result in jail time for banking executives involved in scandals exposed in the report. It will be up to the regulators to determine the next steps.
The landmark report is also set to spark an immediate shake-up of Australia’s mortgage broking industry by banning trailing commissions and ensure brokers’ responsibility is to the home owner, not the bank.
The Morrison government has vowed to “take action” on all 76 recommendations confirming the establishment of a new compensation scheme of last resort to award compensation.
“As we have heard, too often the conduct within our financial institutions has been in breach of existing laws and fallen well below community expectations,’’ Treasurer Josh Frydenberg said.
“As Commissioner Hayne has made clear: there can be no doubt the primary responsibility for misconduct in the financial services industry lies with the entities concerned and those who managed and controlled those entities.”
There’ll also be a host of changes to the new Australian Financial Complaints Authority (AFCA) and taxpayers will be asked to fund $30 million in compensation for individuals who had unpaid determinations in their favour by predecessor bodies of the new group.
On executive salaries, the report calls for regulators to pay far greater attention to whether remuneration structures are encouraging staff to break the rules. It also recommends making allowances for the clawback of bonuses and share offers in the event of misconduct.
The Commissioner’s final report also finds that where banks and financial institutions have broken existing laws, regulators have failed to prosecute.
“Very often, the conduct has broken the law. And if it has not broken the law, the conduct has fallen short of the kind of behaviour the community not only expects of financial services entities but is also entitled to expect of them,’’ the report states.
“Too often, financial services entities that broke the law were not properly held to account.”
First published on www.thenewdaily.com.au and republished with permission from The New Daily. For the full article visit The New Daily website.
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