FINSIA tells banks to be proactive about professionalisation

FINSIA has responded to the Royal Commission interim report by calling on the industry to rally behind its call for “Professionalisation to be the key to the future.”

Executives from the big four incumbent banks and the rest of the financial services sector need to get on board to make sure they set standards that will restore customer trust.

Our 8,500-word document delivered to Commissioner Kenneth Hayne and his team highlights how our package of measures would do just that.

The detailed response fine tunes the earlier submission lodged in June and goes into greater detail about the formation of a Professional Banking Council.

CEO and managing director Chris Whitehead said: “It is time for the whole industry to get on board to set standards of professionalism.

“As the Interim Report has highlighted there is a need for both individuals and organisations in the financial services sector to take responsibility for their actions and the harm they cause members of the community. 

“This is an issue FINSIA feels very strongly about. 

“Since well before the Royal Commission we have been promoting the need for professionalism across the financial services sector.”

While FINSIA’s response supports Commissioner Hayne’s call to prosecute under the law when necessary and make sure remuneration policies do not lead to a conflict of interest, it says there is “a third pillar of the solution to misconduct”.

The submission says: “Professional standards would leave room for professional judgement (including to manage conflicts between self- interest and duty) while ensuring that responsibility for wrongdoing is sheeted home to particular individuals who cause harm to members of the community.

“Another important aspect of a professional standards framework is that it unites practitioners under a common ethical purpose of promoting community expectations. 

“This social group of peers empowers individuals within the group to speak out about misconduct in their firms and to advocate better outcomes for the community. 

“Another important aspect of this third pillar is inspiring pride in individual practitioners about their behaviour and service.”

As Round 7 of the Royal Commission starting in Sydney on November 19 is looking at policy and the way forward, it is crucial that FINSIA has an ongoing input, according to Whitehead.

He said: “The comment was made that the release of the interim report was a day of shame for banking.

“That’s very true. Many of us are very disappointed by the hearings but, importantly, it doesn’t need to be a day of shame for all bankers. The vast majority of people within the industry are trying to the right thing.

“Commissioner Hayne highlights that people at times do the wrong thing - even worse breaking the law.

“That highlights we are talking about a cultural challenge, it’s a conduct challenge. And that goes to the heart of what FINSIA has been talking about for the past 18 months.

“Which is how do we raise standards and conduct and how do we help people get better.

“The important thing to note is this does need to operate at an industry-wide level. Each institution will try to do what it sees as the right thing, but inevitably we will see competitive pressure will pull us back down to the lowest common denominator.

“FINSIA has thousands of employees of the major banks and they are telling us they are supporting the raising of individual standards and the settings codes of conduct.

“They want to be held accountable. And they want those who misbehave tone pushed out of the industry.

“It’s time senior executives and those in the C-suite get together to draw  up a set of standards and help form a Professional Banking Council would sit across the sector to police and support the industry.

“As we have said before, we shouldn’t wait for the conclusions of the Royal Commission.”

Speaking at Summit 2018, which was held to discuss ways to navigate a way to a better post Royal Commission world, he said that FINSIA would continue to strive for better standards of conduct and competency.

He said: “We will keep this professionalisation debate going forward.”