Edited by Nelly T.
The big banks were publically reprimanded by Prime Minister Malcolm Turnbull over customer mistreatment after a series of scandals over ruinous financial advice Mr. Turnbull has urged them to redress their wrongs.
The Prime Minister warned the banks that if their poor conduct and pay practices continued they will endanger their social licence.
“The singular pursuit of an extra dollar of profit at the expense of values,” Mr. Turnbull’s comments came after legal action was taken against Westpac’s alleged interest rate rigging on Tuesday.
The Prime Minister said that despite the support the banks received during the financial crisis the truth is “our banks have not always treated their customers as they should.
“Some, regrettably as we know, have taken advantage of fellow Australians and the savings they have spent a lifetime accumulating, seeking only dignity and independence in their retirement.
“Redressing wrongs is important especially where it is done promptly and
Mr. Turnbull has admitted that there have been “too many troubling instances” in recent times for complaints to simply be dismissed.
Australia’s major banks face alleged financial scandals ranging from interest rate rigging to financial planning and life insurance.
In the latest incident Westpac is now facing accusations of rigging Australia’s most widely used interest rate benchmark to boost its profits between 2010 and 2012; the Australian Securities and Investments Commissions (ASIC) launched legal action on Tuesday.
ANZ is also being investigated for allegedly breaking the Corporations Law for similar conduct; the ASIC is seeking fines and court findings. National Australia Bank and Commonwealth Bank of Australia aren’t safe either as inquiries are underway presumably for the same reasons.
ASIC has settled legal action with foreign banks UBS, RBS and BNP for similar conduct.
The Prime Minister avoided saying if he supported a royal commission into the banks, however he told the audience of senior bankers and business people that banks needed to change their pay practices.
“Wise bankers understand that banks need to very publicly demonstrate that the values of trust, integrity, placing the customer first in every way way, these must be lived and not just spoken about.
“They recognise that remuneration and promotion cannot any longer be based solely on direct financial contribution to the bottom line.
“In a healthy banking culture. the singular pursuit of an extra dollar of
profit at the expense of those values is not simply wrong, but it places at risk the whole social licence, the good name and reputation upon which great institutions depend.
“We expect our bankers to have higher standards, we expect them always, rigorously, to put their customers’ interest first,” he said while speaking at a Westpac function in Sydney to mark the 199 years since the bank was founded.
“And this is not idealism – this is what we expect and I know it’s what the leaders of Westpac expect.
“Because they know that banks don’t just operate under a banking licence, they operate under a social licence and that is underwritten by public confidence and trust.”