Appearing before the House of Representatives standing committee on economics, Westpac CEO Brian Hartzer urged legislators to consider the “second-order effects” of further regulation that may be introduced to reduce misconduct off the back of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
“New regulations and tougher sanctions alone are not going to solve the risk of poor conduct,” Mr Hartzer said.
Mr Hartzer expressed support for an observation noted by commissioner Kenneth Hayne in his interim report, which suggested that simplifying regulation could reduce poor consumer outcomes.
The major bank CEO warned that further regulation could exacerbate the slowdown in credit and housing market conditions and impede economic growth.
“[In] striving to address the issues that have led to misconduct, it’s important that policymakers remain live to the potential second-order effects of new legislation and regulation,” the CEO continued.
“While overall economic growth remains sound, we are seeing increasing uncertainty, especially among the consumer and small business sectors.
“House prices are falling, income growth has been low, and consumer spending is likely to be affected by people’s confidence in the value of their home.
“Therefore, regulatory changes that impact how much individuals can borrow, the cost and availability of credit for business, or the availability and affordability of suitable financial advice, should be considered carefully.”
CBA and Westpac accept RC charges
Also appearing before the parliamentary committee was Commonwealth Bank CEO Matt Comyn, who acknowledged the failings of the banks highlighted by the financial services royal commission.
Mr Comyn accepted commissioner Hayne’s charge that the bank was “too slow” to report misconduct and implement internal reform.
“Our customers and the community rightly expect that we always do the right thing, but we’ve seen far too many instances of unacceptable customer outcomes,” Mr Comyn said.
“As the royal commission has shown, there have unfortunately been failures of judgement, failures of process, failures of leadership, and in some instances, greed.”
Mr Comyn continued: “We’ve been too slow to identify problems, too slow to fix underlying issues, and too slow to put things right for customers.
“We became complacent. Our capability has been inadequate in critical areas, particularly operational risk and compliance.
“We have underinvested in prevention even though we have invested significantly in customer remediation. This is completely unacceptable.”
Mr Hartzer apologised for the bank’s “confronting” failings.
“The impact of these actions on banks is significant and ongoing. The issues they have raised are confronting, and on behalf of Westpac, I would like to once again apologise unreservedly to any customer we have let down,” he said.
Compliance and education requirements are just speed camera revenue makers. They don’t address much at all and just raise money for corrupt policy makers.
This industry is pathetic. Good luck surviving and getting clients to pay your fees going forward. They won’t pay for your raised cost of operating anymore. It’s too high.
The FPA and the AFA have abandoned you and killed this industry.
Who are you to say this tripe? The industry isnt dead. People are looking for advice all the time. Those that stay in the industry will be very successful over the next 5 years. You on the other hand will still probably be making horrible comments trying to scare people and put them down. Whos pathetic now?
I’d actually disagree “I don’t think so”. It’s not dead but it’s definitely needs improvement. I’m in a regional area and have seen 5 financial planning businesses close down and every day I see ordinary Australians who can’t afford to pay my fees due to the amount of red tape and compliance. Business is booming for me now personally but I’m angry that I have to turn away so many Australians that need advice due to the actions of poor advisers and FPA getting kick backs from legislators. You can sit in your ivory tower in Pitt Street Sydney looking after LGBT CEO’s charging $15,000 for ZIP and say all is good in our industry but the reality is we’re drowning in red tape and compliance and I blame the FPA and advisers lack of self regulation and their relationship with the banks.