One of the challenges confronting the financial services sector as it goes into a period where the Federal Government has relaxed responsible lending obligations and there are unprecedented low interest rates is to ensure it still maintains a sense of a duty of care.
The relaxing of the responsible lending obligations - the financial services equivalent of responsible serving of alcohol in pubs, clubs and hotels - should not be seen by anybody as carte blanche to go back to their old methods of flogging off products and placing consumers at risk.
Many consumers will be unaware of the intricacies of product contracts. They may even assume a product is the same as something else they were involved with a while back. We know that some individuals will seek to jump at advertised high returns offered by outfits that know consumers are dissatisfied with returns from traditional bank products.
We also know that the recession caused by the forced collapse of economic activity as a result of pandemic paralysis has created a need for businesses and others to seek finance to get back on their feet.
Each of these groups has to negotiate the journey out of hardship and they should not be subjected to the kind of conduct that saw the royal commission into financial services misconduct called in 2017.
What we cannot lose sight of as a community as we move farther away from the release of the final report of that costly royal commission is that a challenging climate such as this will see businesses collapse, individuals struggle with their personal financial positions as well as people trying to get a greater return by taking risks with their finances that they perhaps should not.
This is a time for more stringent regulation and a re-emphasis on ethical business conduct rather than a time for the compliance hurdles for banks and other entities to be lowered.
Loosening up compliance requirements might be one way of cutting back on operational costs during lean times but that is no way to protect consumers that will without doubt eventually find themselves in strife.
Here’s hoping that banks and other financial services organisations do their best to avoid fostering an environment where staff are encouraged to rort their customers in order to meeting sales performance hurdles.
We can all do without another royal commission into scammers, shysters and swindlers.
• Tom Ravlic’s latest book, Rorts and Rip-Offs, is officially launched today. It is published by Wilkinson Publishing and copies can be ordered by going to www.wilkinsonpublishing.com.au