Banks face long battle for trust

THE Australian banking industry is just beginning a long journey to repair its conduct and culture after misconduct scandals, the world’s top financial figures warn.

The Group of 30’s views on the Australian “crisis” were released yesterday, coinciding with the final day of the financial services royal commission’s public hearings.

Based in the US, the G30 is a private, not-for-profit group of people with experience in finance and economics from across the public and private sectors.

In a report on banking culture and conduct globally, the group noted the “ongoing royal commission investigation and pending recommendations, as well as continued revelations of retrospective misconduct among Australia’s financial institutions”.

It expected that “the Australian banking industry is only beginning its long journey to repair its conduct and culture”.

A key conclusion was bank conduct and culture were at the centre of a “slow, uphill battle for trust”.

The G30 said the situation unfolding in Australia demonstrated the banking industry was subject to further serious scandals and fallouts.

It pointed to misconduct that surfaced in recent years such as weak controls to prevent thousands of breaches of anti-money-laundering and counter-terrorism financing laws.

The Commonwealth Bank has agreed to pay about $700 million in penalties for failing to quickly report more than 50,000 suspicious transactions at its so-called smart ATMs which take deposits.

The G30 report also cited unsuitable financial advice and fees-for-no-service issues, such as charging the accounts of dead clients.

Former Westpac chief Gail Kelly, the G30 steering committee vice-chair, said for permanent and ongoing change to occur, banks needed to focus on leadership at every level of their organisations.

“Leading by example and ensuring that day-to-day activities at the front line are consistently aligned with company values is critical,” Ms Kelly said.

Banking royal commissioner Kenneth Hayne noted the report yesterday, on the final day of public hearings.