Today’s banking royal commission interim report has exposed a financial services industry driven by greed and self-interest that is in urgent need of reform, according to Maurice Blackburn Lawyers.
Maurice Blackburn Principal Josh Mennen said today’s report had set out damning observations on issues of responsible lending, financial advice and conflicts in the selling of financial products, as well as the role of regulators.
“Today’s report poses serious questions about the conduct of the financial services industry and shows that for too long the balance has been skewed towards the banks and financial service providers, instead of customers,” Mr Mennen said.
“This is a warning shot – today’s report has served up a very loud bark and we look forward to seeing the final report that delivers the bite - the industry is now well and truly on notice that it is well past time to get its act together.
"As today’s report makes clear, if banks have to choose between their obligation to their clients and their obligation to their own self-interest, all too often they choose the latter - the conflicts of interest are staggering.
“It reflects what we see for our clients: customers sold completely inappropriate products, where the motive has been self-interest and a total lack of regard for the obligations the industry owes to customers.
“This is particularly evident in the report’s criticisms of mortgage assessment controls and the systemic failure to assess and verify many customers’ expenses and capacity to repay excessive loans.
“These practices will cause mortgage stress and distress sales for Australian home owners for years, a problem exacerbated by mortgage brokers who have helped push excessive mortgage debt onto customers in the hunt for bonuses and commissions.
“Today’s report and the hearings to date have also unveiled concerning findings with respect to the role of the regulators in monitoring and ensuring the highest standards for the industry.
“Criticisms of the role of ASIC are particularly concerning – today’s report and the hearings to date have demonstrated a repeated inability from the regulator to protect the public, including a failure to properly police the sector and to detect and punish misconduct in a timely way.
“Such behaviour gives the clear impression of an overly familiar relationship with industry, giving weight to suggestions of regulatory capture.
“As the Royal Commission has so patently made clear, the role of a strong and independent regulator within the financial services industry is essential to holding the industry to account.
“We must have regulators that are appropriately resourced to perform this critical function, and we would welcome further consideration from Federal Government as to how best to achieve this as an urgent priority for the industry.
“Today’s report shows that it is a very long way back for banks and ASIC to rebuild trust with customers.
“The onus must now be on the industry to at last walk the walk when it comes to putting customers first, and not just continuing to pay them lip service,” he said.