Their virus response has been top-notch. But what happens when the support ends?
Australia’s banks have stepped up to protect customers and consumers with loan deferrals, while the government has rolled out massive fiscal stimulus in the form of JobKeeper and JobSeeker. But these measures are all time-limited – and when they end, many Australians are likely to be left high and dry.
“The challenge will be into the future,” said ASIC chair James Shipton. “We have some way to go. There [are] a lot of issues to work through. And this is why staying the course on the starting approach is going to be so absolutely crucial. Because there [are] going to be issues to work through when it comes to customers and consumers, and they will be difficult.
“The best way we would like to see that worked through is with fairness and adherence to the legal obligations.”
The reputation of Australia’s major financial institutions was ravaged by the royal commission, which saw executive heads roll at AMP and NAB and hundreds of millions in remediation paid to customers for offences as various as fees for no service to charging dead customers.
The COVID-19 crisis has given them a golden opportunity to turn that reputation around, and they’ve seized upon it – but at some point, those institutions are going to have to return to business as usual. And with JobKeeper and JobSeeker set to be phased out in September, that could mean disconnecting many Australians from the financial life support they’ve come to rely upon. And that creates a staggering reputational risk.
While Mr Shipton has observed “a significant shift” in resources and attention to consumer and customer-focused issues, Australia’s financial institutions can’t lose sight of the non-financial risks.
“This is where professionalism, conscientiousness, and competency [are] so absolutely important,” Mr Shipton said. “While it’s absolutely crucial to focus in on the numbers, we must not lose sight of the non-financial risks. We must not lose sight of consumer and customer-oriented risks.”
“Coming out of the financial crisis – the last one at least – there were lessons to be learnt in relation to financial risk, as there are now, economic risks, as there are now, but non-financial risks will also endure.”
The implementation of the royal commission commitments has been delayed by six months, and ASIC has also changed its regulatory agenda, deferring some activities – including investigations and supervisory initiatives – and redeploying staff to ensure the integrity of markets.
“Despite the challenges posed by COVID-19, ASIC expects entities to treat customers fairly, avoid adding further financial harm or burden to consumers, and act to maintain the integrity and efficiency of markets,” Mr Shipton said. “In other words, we expect the industry to adopt a stance of utmost professionalism in everything that they do right now.”
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