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Royal commission will lead to significant change in the industry, a poll of FINSIA members at our latest town hall says

by Lewis Panther | 19 Jul 2018
The Royal Commission will lead to significant change in banking and financial services, a snap survey of FINSIA members suggests. 

But they are worried the impact of Kenneth Hayne’s inquiry into misconduct is highly likely to inhibit lending and have a knock-on effect on the economy with banks becoming more cautious. 

Dozens of members took part in the quick-fire polling session during the latest Town Hall in Sydney where both the audience and panelists voiced their frustration at the one-sided nature of the commission.

The feeling that the recommendations made by the Royal Commission will mean changes to the industry was universal.

Seventy-six per cent of those polled said they thought there would be “moderate change” with the other 24 per cent saying it will result in “transformational changes”.

Half the audience of industry insiders felt that the ongoing inquiry had “uncovered new issues but with few surprises” with another 43 per cent saying there was “little that is new”. Just seven per cent said the revelations were shocking.

The majority of the audience, from a cross section of members, fear it will “inhibit” lending and other financial services, with 27 per cent saying it will impact “significantly” and another 46 per cent saying it will impact “somewhat”.

Only seven per cent said there would be no impact, with another 20 per cent saying the results would have a “positive” impact on lending. 

Two-thirds of those surveyed felt that the new BEAR legislation - with senior directors being more accountable for their company’s behaviour - will work with a quarter unsure and just eight per cent saying it would not have an impact.

Industry leaders should make sure they know what is going on in their business and be more thorough when it comes to making sure examples of misconduct are removed, was a strongly held view.

There were mixed feelings about what the drip feeding of negative headlines would have on drawing new talent into the financial services industry over the coming years.

Forty per cent said it would have “some impact” with 13 per cent saying it would have a “significant impact”. A fifth of those at meeting at Dentons said it would not have an impact with another 28 per cent saying it would have a positive impact.

The panel - NAB non-executive director Phil Chronican, financial services expert Fahmi Hosain, and Banking and Finance Oath director Cris Parker - all agreed that cases of bad behaviour had to be highlighted.

But the sense of frustration for FINSIA professionals throughout the room was summed up when a member of the audience asked if the industry should be shouting about the good things it had been doing.

The response was that it was not the right time to be hitting back at all the accusations and negative publicity - even though APRA chairman Wayne Byres has started to make a defence of the industry in his submission to the Royal Commission.

“We are seeing things that have gone wrong brought to the surface. All of a sudden the public is finding out about it all and they are outraged. We are going through a cathartic process.

“Although there is a positive story for financial services, now isn’t the right time.

“All people want to hear are apologies. We shouldn’t shy away from the facts. We know that greed and ambition has driven some people to do things that they should be held accountable for.”

“But it should not stop people from within organisations talking amongst themselves about the good things they have been doing.”

That sense of getting on with the job and not waiting for the recommendations from the Royal Commission came through too.

“We need to be able to look in the mirror and recognise that we need to get things right first time and put the customers interest ahead of shareholders interests.

“A lot more will come out. The important thing is that we need to look through the noise and focus on the things we can do and what we can do better so we don’t have to through this again in our lifetimes.”

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