Banks in ‘battle for trust’

G30 points to long slog to regain lost goodwill

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

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

“With the ongoing royal commission investigation and pending recommendations, as well as continued revelations of retrospective misconduct among Australia’s financial institutions, we anticipate that the Australian banking industry is only beginning its long journey to repair its conduct and culture,” the G30 said.

The views were contained in a global report on banking culture and conduct by the G30, a private international body of leading financiers and academics. A key conclusion was that bank conduct and culture were at the centre of a “slow, uphill battle for trust”.

The G30 said the situation unfolding in Australia demon- strated that the banking industry remained subject to further serious scandals and fallouts. It pointed to egregious examples of misconduct that surfaced in recent years, including weak controls to prevent thousands of breaches of anti-money laundering and counter-terrorism financing laws, unsuitable financial advice and feesfor-no-service issues, such as charging the accounts of dead clients.

Former Westpac CEO Gail Kelly (left), the G30 steering committee vice-chairwoman, said for permanent and ongoing change to occur, banks needed to focus on leadership at every level of the organisation. “Leading by example and ensuring that day-to-day activities at the frontline are consistently aligned with company values is critical,” Ms Kelly said.

Banking royal commissioner Kenneth Hayne QC noted the report’s release yesterday, while Australian Prudential Regulation Authority chairman Wayne Byres agreed that there was a long journey ahead for the industry.

Mr Byres said the misconduct revealed when financial institutions “confessed their sins” to the royal commission showed issues persisted for too long before they were detected.

“Regulators can’t find all this stuff,” he said. “We can’t be the first line of defence.”

He said there needed to be more accountability.

“No one has actually taken responsibility for issues,” he said.

“Boards have not known how to apply consequences because it’s not clear who was responsible for things.”