Stories about financial services professionals ripping customers off are a dime a dozen but they would not be if the moral compass of the financial services sector was more finely tuned.
It is practitioners in parts of the financial services sector that keep folks in journalism like Adele Ferguson busy because they forget the core reasons why a banking royal commission was held in the first place.
Ferguson’s Four Corners exposé tonight will cause further embarrassment to a sector that has largely sought to manage its way back into the good books of the public following the Hayne Royal Commission. Banks and other institutions that appeared before the royal commission are still facing possible days in court as a result of case studies that were brought out into the public domain.
The exposé also airs at a time when people may be reflecting on the debt they took on before the coronavirus pandemic and wondering how they are going to manage the relationships with their bank.
Misconduct within the financial services sector was rife and it spanned the better part of three decades when vertical integration came into being and poor corporate practices ossified to the point where financial services institutions were transfixed on getting a fix of profits rather than worrying too much about consumer welfare.
Banks flogging their own products to customers via tellers or advisers incentivised by commissions or bonuses. Advisers flogged products such as insurance for their own personal financial gain to customers so wrapped up in a blissful vision of their financial future that their ambition was richer than their bank account could afford.
The rip-off merchants in the banks also kept offering credit to customers who told them they had problems with gambling and other issues. Some of Hayne case studies are making it into court but it is clear that the messages have not gotten through to parts of the financial services sector despite the public flogging given to some in the banks.
Don’t lose sight of the fact that while all of the money-making shenanigans were going on over many decades there was also a turf war between financial planners and accountants that resulted in further tightening of rules governing who can provide financial advice to clients.
The brawl back in 1995 during which the late Jock Rankin, then chief of the Financial Planning Association, told the accountants that there were dabbling in financial advice was a classic example. Accounting bodies fired back with the trusty retort that the accountants were the trusted advisers and in a position to provide incidental financial advice.
This only served to ensure that the Federal Government proceeded to tighten the regulations on all professionals so that a license or an authorisation to represent was the way in which people would be able to unlock the door to providing financial advice.
Advisers are now required to jump through many more hoops to fulfill education requirements because of the poor behaviour of others that preceded them. This is the panel beating an entire sector has gone through because of the outright bastardry of many people over the years who used what some call a capacity for wit and charm to fleece vulnerable people.
The workers compensation sector is going to be facing significant questions in its own right following the airing of the Four Corners investigation. It remains to be seen whether the Morrison government seeks an inquiry of some kind at a Federal level because the key authorities that deal with workers compensation are state-based.
One thing is certain: the coalition has a poor track record in moving quickly when it comes to establishing properly resourced inquiries into matters concerning the financial services sector within a reasonable time frame.