The Finance Sector Union of Australia (FSU) welcomes the release of Commissioner Hayne’s interim report as an important first step in reforming the financial services sector.
“We agree wholeheartedly with Treasurer Josh Frydenberg that the culture, conduct and compliance of many of our financial institutions falls well below community expectations and standards,” said FSU National Secretary Julia Angrisano.
Ms Angrisano said Commissioner Hayne had quite properly identified greed as the motive behind the excesses in the sector and asks ‘how this culture of greed and selling was allowed to permeate banking, insurance and finance?’
“We know how that greed was allowed to spiral out of control. It was because of conflicted remuneration, a sales culture that put profits before people and senior bankers and executives of financial corporations who were content to ride the gravy train of multi-million dollar salaries and bonuses.”
“Executives were driven by enormous salaries if they delivered short term profits. They did this by exploiting customers and bank staff.”
“Bank workers who did their jobs diligently serving their customers were under extraordinary pressure to sell, sell, sell.”
“Those who didn’t meet sales targets were driven out of the industry, or worse, lost their health and on occasion their lives.”
FSU National Secretary Julia Angrisano said the Royal Commission’s hearings have revealed some appalling stories of corporate greed and a disturbing lack of compassion for customers.
“The FSU’s members are in a similar position as the exploited customer because the senior management of the banks extend extraordinary pressure down through layers of middle management to push front-line staff and call centre workers to meet sales targets,” Ms Angrisano said.
“And while the banks have given numerous assurances that heavy handed sales targets are being phased out, bank workers are still being pushed to sell products to customers who don’t need them and can’t afford them.
The FSU believes that once Commissioner Hayne releases his final report and recommendations next year it will be incumbent on Prime Minister Scott Morrison and the regulators to institute major reforms and make sure banks comply.
Commissioner Hayne has committed to identifying “why” and “how” these problems occurred and how to prevent them reoccurring.
The FSU believes major changes are needed to clean up the financial services sector.
BETTER GOVERNANCE: The role and responsibilities of the Boards of financial service entities along with their senior management teams are integral in developing institutions that appropriately balance returns for shareholders and the provision of financial services’ and products that are created delivered and maintained in a professional and ethical manner.
BETTER REGULATION: The current regulatory regime is a complex mix of legislative measures, regulatory guides and self-regulatory measures that the enforcement and adherence to these obligations has become glaringly inadequate.
BETTER CULTURE: Improvements to governance and regulatory mechanisms will not remedy the issues identified through the Royal Commission on their own. The misconduct identified has its genesis in systemic, cultural issues. For finance workers improvements in institutional culture are key to addressing these issues. Whilst finance companies continue to require, promote and incentivise sales and efficiencies at the expense of compliance and customer outcomes through conflicted remuneration systems at all organisational levels, genuine change cannot occur.
Quotes attributable to FSU National Secretary Julia Angrisano
“Finance workers are the link between customers and the institutions where they work. It is vital that these workers are able to contribute their perspectives and experience in a genuine and meaningful manner in the ongoing reform of our industry”
“Our regulatory regime must be refocused so as to be consumer focused with obligations reflecting financial institutions responsibilities to act fairly and ethically”
“Self-regulation has failed in the financial services sector. The last 6 months of public hearings has demonstrated that this industry is incapable of regulating itself when it comes to delivering for customers. ”
“The greed and avarice of bankers and financial services executive must end. It is hurting our country, doing enormous damage to consumers and small business and unfairly exploiting more than 400 thousand workers in the sector.”
“Our members are keen to see Commissioner Hayne address the issues of conflicted remuneration throughout the industry. Much has been said about the pay of frontline employees, but if conflicted pay is not examined and addressed up through the different lines of management, genuine reform cannot not be expected to be achieved”
“Most finance workers are dedicated to providing excellent service to their customers. Commissioner Hayne’s Interim Report reflects that the issues of misconduct identified through the course of the Royal Commission so far are focused on a failure of culture permeating through the management levels of these organization.”