From the always excellent Adele Ferguson who exposed much recent banking malfeasance:
To get to the root of unethical conduct requires more than creating a strong regulator. It requires a systemic review, which would look at vertical integration, whistleblower legislation, a review of remuneration structures, a review of the many compensation schemes in place, as well as a compensation scheme of last resort.
Many of the scandals, exposed in Fairfax Media, exposed systemic wrongdoing. They came to light as a result of whistleblowers, some who paid a high price for their honesty including termination and/or smear campaigns.
The various scandals showed how thousands of customers lost their life savings, either through unscrupulous financial advisers or by having legitimate life insurance claims rejected or delayed by claims managers who operate in a culture that puts profit before people.
Many of these victims couldn’t afford lawyers and went to FOS to lodge a complaint. The FOS, which is funded by the industry, has a number of shortcomings, not least of which is the compensation caps and the length of time it takes to review claims.
Treasurer Scott Morrison committed to reviewing these caps, along with a proposal to establish an expert panel to consider merging dispute resolution schemes. But what about the cases where the FOS rules in favour of the consumer but the financial institution is unwilling or unable to pay? It is why a compensation scheme of last resort needs to be introduced.
Precisely. Refunding ASIC is politicising the issue not having a Royal Commission. Why pay the same regulator that failed more? Why give the same boss of that same failed regulator (who was a star in The Big Short) a contract extension instead marching orders?
Why put the solution before the problem is properly defined and only after the Opposition has made it an issue at all? Politics of course.
Meanwhile, at The Guardian it gets worse:
The Turnbull government’s plans to shift the Australian Securities and Investments Commission onto a user-pays funding model will fail to fix the poor conduct plaguing the financial industry, a former Asic chief economist has warned.
Economist Alex Erskine, who was Asic’s chief economist between 2007 and 2013, has also warned the user-pays model will increase the likelihood that the regulator may be “captured” by the banks it is supposed to be regulating.
The Turnbull government announced sweeping reforms to Asic on Wednesday, promising to boost the regulator’s surveillance powers with a multimillion-dollar technological upgrade that will restore some of the funding stripped in Tony Abbott-era cuts.
Alex Erskine is an excellent economist and policy-head.
Another Turnbott clangor.