Right now there’s a Royal Commission (RC) into financial services making waves across Australia. Like chucking a pair of footy boots on the back porch after a match, everyone knew bringing the Aus finance sector into the light would be a bit smelly. Last week saw round 3 of the hearings, and another bruising period for many in the financial services sector.
While some of what’s been disclosed so far in the RC was ‘open secrets’, there have been a couple of surprises along the way. And really, what the RC has told us about the old ways of doing business in Aussie finance, and what will be the go in the future is pretty important.
What’s the Magic Word?
The RC is officially called The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Now, let’s go through that again and underline the keyword: The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Anytime you have the word misconduct showing up in a government enquiry you know it’s going to be serious.
And in the minds of many Australians, this RC was seriously overdue. I did a video that touched on some of the biggest issues we’ve seen so far from the RC back in April. In case you’re unable to watch it right now (I know some of you good people are on the move and have a data cap on your phone) let’s recap some of the ‘greatest hits’ we’ve seen put forward at the RC:
- A legally blind woman lost her house via eviction from Westpac
- The NAB used gym owners and tailors to sell bank loans (trusted experts, eh?)
- CBA didn’t pay a heart attack insurance policy – for someone who had a heart attack
- AMP had been unlawfully deducting customer account service fees since 2009
…and now over 5,5000 submissions have been made to the RC. That number is still growing, and – for any of you wondering – no, they’re not likely to be saying ‘Good job fellas! Keep up it!’.
What’s the Bottom Line?
All up, our financial system in Aus has been a pretty decent and stable one. We’ve the ‘four pillars’ policy for our big four banks (Commonwealth, ANZ, NAB, and Westpac), designed so they balance against each other and keep the system stable.
We’ve also had a strong superannuation system – and despite some of the revelations of the RC – there’s a lot of good folks in the ATO, ASIC and Co in Canberra that are trying to keep the system fair. They cop it when a stuff up occurs – and fairly so! – but they also never get any credit when they get it right. Alot of times they have in the past, and that’s worth noting.
It why when it comes to indicators like the Corruption Perceptions Index we rank pretty well, tied at 13th in the world with Hong Kong and Iceland.
OK, that’s not quite top 10, but when you recognise the tops spot are held by smaller Nordic nations and those do-gooders next door in New Zealand, we’re doing pretty well for a medium-sized country of 25 million and counting.
But at the same time, we can’t lose sight of the fact that ‘pretty good’ is not good enough, especially as we’re seeing major fault lines in the world now surrounding things like tax avoidance, offshore banking, and even the difficulty of cryptocurrency regulation.
The same ‘four pillars’ system that has helped prevent things like major market meltdowns has also meant when one is caught out up to no good, odds are good they’ll be problems at the others. This has been borne out with the CBA, Westpac, ANZ, and NAB all copping grief at the RC.
So Do We Just Grin and Bear It?
There’s an old saying about Royal Commissions; governments never begin them unless they know the outcome. As it happens, the Turnbull government for a long time wasn’t keen on getting an RC kicked off. That’s surely some points off the board for them given what we’ve learned. But the prior Rudd and Gillard governments that came didn’t get this RC done either.
Really, whatever your politics, it’s a reality that financial sector carries a lot of weight and influence with both major parties. Also that the old ways of delivering change here won’t work.
The interim report for the RC is due 30 September 2018, and the final one by 1 February 2019.
They’ll be some movement at the station after these dates, in Canberra and among banks. Promises of reforms, of change, and preventing what we’ve seen here from happening again. But really, a lot of players dropped the ball here, and now we’re going to trust ’em to bring it home next time? I think we need some new people in the arena, that want to see some real wins here.
As it happens? Those new people are right here, right now. Everyday Aussies, who’ve cared enough to click this link and read about the latest on the RC. Who want to see an Aussie finance system where good and decent people can make a living sure – but one that also guards against good and decent people getting taken for a ride. Getting ripped off, getting denied their fair go.
Right now 2018 really feels like a big turning point in our world. Oh sure sure, at first glance it might seem like it’s taking a turn for the worse. But that’s only if you decide to do nothing. To stay quiet, the put speaking up in the ‘next time’ basket, and just move on. But I reckon if you’re reading this odds are really good you’re going to go the other way. You’re ready to act.
Settling the Accounts
The latest revelations about the RC come at a time when Aussies are having a serious chats about their experience as consumers. Few of us said bye totally to Facebook after the Cambridge Analytica scandal, but a lot of us have had a rethink about how we’ll use it in future.
Ditto when it comes to big new capitals works, and big new events. Us Aussies are a cheery bunch always ready to get out for a game, and to host a big party – but we also want real results.
A new stadium if the trains don’t work? Pff. A big party that could drive out first home buyers? Ugh. At the core of these debates locally and nationally is regular people saying it’s time for change.
The same applies with financial services, and what’s been learned from the RC. Some really dodgy stuff that makes you want to hurl, and then pick up ya phone and swap to another team. You wanna do that because you know people in the business of being dodgy shouldn’t get rewarded. And because you know there are decent businesses out there that’ll do the right thing.
There are a ton of them out there. Good businesses who are upfront, and are trying to make a splash in the local market. Many people often avoid smaller financial firms, thinking ‘oh this sounds good but my money is safest in a big four’.
Well actually, the RC has shown that’s pretty questionable in many cases. Also, many Aussies don’t know this but the Aus gov actually guarantees and protects up to $250,000 of cash you deposit with a Authorised Deposit-taking Institutions (ADIs). So your money is protected, whether you use a bank, credit union, or building union. So you have safe options beyond the big four.
What I’m saying to you is if you’re peeved like a lot of Aussies about the RC and want change?
That even if you don’t want major shifts, you’d still like to swap some things up, and shift some business out of one of the big four that has really pissed you off? Go for it!
We see now in our world a fair bit of turbulence due to disruption. Like a plane flight its normal, but can be a bit bumpy. The upside of all this disruption thought? There’s never been an easier time to change providers. To put your savings or other accounts with good and decent providers.
It’ll also be a lesson to these cowboys who thought they’d never get caught out. They did.
And if you do make a change here? You put pressure on the bottom line at these banks.
Yep, the bottom line. The thing they really care about – and will make change because of it.