APABI Talks to FINSIA, Australia: Helping the Financial Sector Recover from Ethics Inquiry
The most important event for Australia’s banking sector over the past few years has been the 2017-2019 Royal Commission inquiry into widespread forms of misconduct. An interim report implicated “the pursuit of short-term profit at the expense of basic standards of honesty.”
“From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales...When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done.” Scandals included a “pay-for-no-service” practice in the wealth management industry, rigged interest rates, and more.
Mr. Chris Whitehead,
CEO and Managing Director,
Financial Services Institute of Australasia (FINSIA)
In this environment, the Financial Services Institute of Australia (FINSIA) now has a very important job. Training can help bankers understand more diverse perspectives and grasp new industry trends. In an interview with APABI, Chris Whitehead, CEO and Managing Director of FINSIA, explained his views on the importance of education for ethical transformation.
Most people in the banking industry, even in senior roles, hold no formal qualifications. In the past, explained Whitehead, ROE in the sector averaged a hefty 15-16%. At that time, “the industry lost sight of its responsibility to customers,” he said. Now, ROE is down to a healthier 8-10%. Furthermore, out of the big four banks in Australia, National Australia Bank has committed to professional qualifications for all its members.
The interview also touched upon Australia’s fintech upgrades. The government has been highly proactive on this front, within the context of a market economy, through initiatives including a fintech sandbox. It is a global leader in the open data movement, which includes not only banking, but also industries like healthcare, insurance, and telecom. The New Payments Platform, an ambitious future-enabled infrastructure project for real-time payments, however still has yet to reach economies of scale.
Whitehead noted that APABI is a valuable resource for regulatory comparison across the region, and also reinforced the importance of personal contact, despite the relative ease recently of accessing international keynote speakers. Australians, he said, are some of the world’s most eager travelers.