By the Hon. Bernie Ripoll
SAS Group Director
It would be fair to say that banking and financial advice in Australia as we know it will never be the same after the Hayne Royal Commission.
The depth of evidence of misconduct at the most senior levels in our institutions means that whatever the interim and final reports of the Hayne Royal Commission recommend it will be profound. The politicians, their constituents and the regulator will make sure of it this time.
HIH in 2001 was Australia’s biggest and most memorable corporate failure, cost the country $5.3 billion in losses and left consumers devastated. The Hayne Royal Commission is the Banks and AMP’s HIH moment and similarly won’t be forgotten easily or quickly. The brand damage of this institutionalized misconduct in these Aussie icons will be long lasting, as will be the response.
So how can it be that even today some in the financial services sector still don’t get what has happened and can get it so wrong given the number of warnings through reviews, parliamentary inquiries, independent reports and media scrutiny? The answer to these questions will be debated, theorised and become the subject of many books to follow as the Banking Royal Commission becomes globally known as Australia’s Bernie Madoff moment in the USA.
So what are the lessons from what we already know. Here is a quick and dirty;
- Leadership is more than a tick -a-box list of KPIs and metrics - it’s having vision about the business and vision over the business
- Executive teams and individuals must be more than just “business as usual” with group think and nodding yes to the boss
- Good corporate culture is more than expensive reports that satisfy shareholder and reporting obligations and must instead be in practice, reinforced and reviewed
- That little mistakes and small levels of misconduct as part of “doing business” are no longer acceptable
- The path to redemption begins with the smallest of humble steps in acknowledgement of mistakes and reinforced action for change
- The consequences of misconduct will mean more self-inflicted regulation, more costs and more oversight of compliance
Bank executives may have underestimated the level of anger they would generate through their behavior but what can’t be underestimated is the response now that the monster has been unleashed.
The stakes for have never been higher politically with an election expected anytime after August this year and May next year. Prime Minister Malcolm Turnbull is already on the polling back-foot with 31 polls in deficit and a Royal Commission he vehemently opposed to be left with little choice but to face the reality of what has been exposed. Of all the issues that could be a determinant in an election result it could end up being the Hayne Royal Commission and not in favour of the government.