Parliament grills ASIC: 'Why is this still happening?'
There is no "one magic solution" to stop misconduct from occurring within the financial services industry, ASIC deputy chairman Peter Kell has said.
However, following recent ASIC bans on Macquarie and Westpac advisers, and during a Parliamentary Joint Committee on Corporations and Financial Services hearing on Friday, Senator Deborah O'Neill said it was "alarming" to hear incidences of misconduct are occurring at big banks such as these.
"How can it be that you go to NAB, Westpac, ANZ, Commonwealth Bank just down the road, you meet your friendly teller and you get caught up in something like this?" she asked.
"What is going on in these places that this can still be happening?"
ASIC chairman Greg Medcraft suggested there is a lack of shared responsibility.
"In the US, they're taking it one step further and looking to expand [its probes] beyond just the individual who is involved but to the management who is involved at the time the misbehaviour occurred," Mr Medcraft said.
"One of the issues talked about in terms of why is there a cultural problem in banks today, many commented [because] many years ago banks were partners and there was a collective responsibility of the partners to make sure the right thing occurred.
"That's why in the US they're looking to recapture it as a group as opposed to an individual."
ASIC commissioner John Price also advised that those recent bans were responses to misconduct which occurred before at least some of the FOFA laws were passed.
"One of the key aspects of those reforms is an obligation for advisers to act in the best interest of their clients," he said.
"You might question whether it should have always been part of the cultural mindset of firms, but the fact of the matter is now it has been passed into law so I think that in itself will drive a significant change within large organisations."
Senator O'Neill also asked how issues within the Australian financial services industry compared with those overseas.
"This is not a problem that is unique to Australia," responded Mr Kell, "and I would say without a shadow of a doubt, for example, the experience in the UK has been considerably worse."
In the past few weeks, ASIC announced it had banned a former representative of Macquarie Equities and former Westpac adviser. The sanctions are part of ASIC's Wealth Management Project, which is targeting compliance in the four major banks, Macquarie and AMP.
1-in-3 clients considering dumping their adviser
One-third of clients and half of SMEs are thinking over either switching or ditc...
Practifi completes $24m funding round
Aussie advice business management platform Practifi has recently completed a $24...
Former IOOF head to front HESTA advice arm
Industry fund HESTA has appointed a former IOOF practice management head to lead...