Seventh round all remuneration and enforcement
The Royal Commission into Misconduct in Banking has all but outlined its top talking points for the upcoming seventh round of public hearings, beginning in Sydney next week."Controls on remuneration arrangements inside financial services firms" is the first, if unsurprising, bullet point, in the briefing for a legal academic from the University of New South Wales tasked with preparing the commission's latest Background Paper.Second: "Controls on remuneration in connection with financial advice and financial product sales and distribution (commissions and ongoing advice fees)."The paper, published at the commission's website yesterday, identifies five topics, as summarised by Professor Pamela Hanrahan from the UNSW Business School, in her work - "Information About Selected Aspects Of Foreign Financial Services Regulation".Little of her accounts springs any surprise, but its value is the succinctly listed topics that will help refine the preparation for the line-up of industry CEOs, bank chairs and regulators expected to appear before commissioner Kenneth Hayne over the next two weeks.In its introduction, Hanrahan explains "the Royal Commission has asked me to examine" the five topics, remuneration mentioned first.The final three were:• laws requiring the separation of financial product sales from financial advice and addressing conflicts in the distribution of proprietary financial products;• financial product hawking and other forms of unsolicited sales practices; and• regulators, including regulatory architecture, enforcement options and accountability. The body of her paper is ready reckoner on law and practice in the European Union, Britain, United States, The Netherlands and New Zealand.The purpose of the paper, she wrote, "is to provide an insight into the approach taken in these peer jurisdictions to some of the issues raised by the Royal Commission in its Interim Report" from September 2018.The emphasis in her paper is the non-criminal sanctions open to the equivalent of APRA and ASIC.Hanrahan cautions: "There are inherent dangers in isolating particular rules and practices from their local history and conditions. "Nevertheless, the peer jurisdictions have, over the decade since the Global Financial Crisis grappled with these issues and the manner in which they have sought to address them is relevant to the second phase of the Royal Commission's work."