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  • Stop ‘drip feed’ of bad news: RBA’s plea to banks

    2019 - 02.13

    Wayne Byres SF Fin, Chairman, APRA at the FINSIA Signature event- The Regulators, in Sydney, on September 8, 2017. Photo: Jessica Hromas EMBARGOED FOR AFR MONDAY 17TH JULY 2017. ASIC Chairman Greg Medcraft on his legacy. Thursday 13th July 2017 AFR photo Louie Douvis.
    Nanjing Night Net

    Distrust of Australia’s banks will continue unless the “drip feed” of industry scandals ends and banks own up to problems rather than hoping bad news can be kept from the public eye, regulators have warned.

    Three of the country’s most powerful financial regulators on Friday called on banks to be more open when things go wrong, after a series of scandals in recent years put the spotlight on the industry’s culture.

    They highlighted that many of the problems dogging banks today occurred several years before the news became public, and this further fuelled the negative perception of banks.

    Reserve Bank deputy governor Guy Debelle said the “drip feed of issue after issue after issue” across many parts of the financial sector had exacerbated public distrust.

    “No one feels that anything particularly has changed, because even if the issue occurred a few years ago, it still generates the headlines today, and just reinforces the belief,” Dr Debelle said at a FINSIA lunch in Sydney.

    “It would be very nice to have some comfort that actually the cupboard is now bare ??? that there isn’t anything more which is going to come and just further undermine that lack of trust in the industry.”

    The chairman of the Australian Prudential Regulation Authority, Wayne Byres, said a priority for banks should be to “talk about problems and what you’re doing in response to them, rather than hoping no one finds out”.

    “If you think about many of the issues that now are generating headlines and public debate, many of them happened three or four years ago. No one revealed them,” he said.

    “A more pro-active approach is saying: ‘We have an issue, we find it, we report it, we fix it, and if necessary we compensate’.”

    Mr Byres, who has led a crackdown on banks’ higher-risk home loans, also said APRA would maintain the pressure on banks over lending standards in the mortgage market in 2018, citing “heightened risk” in the housing market.

    Australian Securities and Investments Commission chairman Greg Medcraft noted that in recent years several of the country’s banks had been embroiled in scandals spanning financial advice and life insurance, alongside alleged interest rate rigging.

    Commonwealth Bank was also last month accused by Austrac of a mass breach of anti-money laundering laws, and ASIC is investigating whether it should have told investors earlier about the allegations.

    “It’s not a particularly pretty report card, I just hope there’s not another one around the corner,” Mr Medcraft said.

    Mr Medcraft, who steps down later this year and has been a persistent critic of banks, said lenders should focus on treating customers fairly, designing products that were suitable for consumers and improving how they handled complaints.

    Also on Friday, APRA said its former boss, John Laker, former head of the Australian Competition and Consumer Commission Graeme Samuel and company director Jillian Broadbent would conduct the review of CBA it announced in late August.

    Treasurer Scott Morrison welcomed the inquiry and repeated his dismissal of Labor’s demand for a royal commission into banks as little more than a political stunt.

    “This is a real inquiry that’s taking action right now in the measures that it can move forward with, should it need to,” Mr Morrison said.

    The APRA inquiry will not look at the specific allegations made by Austrac.

    In a statement, APRA said: “The goal of the inquiry is to identify any shortcomings in the governance, culture and accountability frameworks and practices within CBA, and make recommendations as to how they are promptly and adequately addressed.”

    CBA said it noted and welcomed the appointments and looked “forward to providing them with our full cooperation”.

    ???with Mathew Dunckley

    This story Administrator ready to work first appeared on Nanjing Night Net.

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