Straya is having a banking Royal Commission of sorts. Yesterday we reported the allegations being aired in a New York court about interest rate manipulation, via Banking Day:
The explicit use, or misuse of AFMA (an Australian industry association) is a pillar of the US class action claim brought by Sonterra Capital, Frontpoint Financial and Richard Dennis against an array of banks over the alleged BBSW rate fix.
The statement of claim in a matter to be heard in a New York court sets out in unambiguous terms the mechanics and lead actors of the alleged rate fixing conspiracy.
Yesterday, Banking Day headlined “AFMA slaughtered in US BBSW claim”, and the following material is a companion to that report. The Australian Financial Markets Association distanced itself from the matter in comments reported yesterday.
The bank defendants – ANZ, CBA, Macquarie, NAB, Westpac and others – “used their domination of the AFMA market governance committees, including the BBSW and NTI committees, to control the BBSW rule-making process, conceal complaints from other market participants, and perpetuate the BBSW methodology that they used to secretly manipulate BBSW,” one section of the claim begins.
A later cracker is that the banks “used their domination of the AFMA market committees to propose rules and regulations that kept the committees’ activities secret.”
One of the biggest claims: “The defendants used their control of the BBSW rate-setting process to keep BBSW susceptible to manipulation.”
Meanwhile, at home, another banking industry association is pretending to conduct an “independent” inquiry, from The New Daily:
A broken incentives scheme is pressuring bank employees to act against the interests of customers, insiders have revealed.
Anonymous complaints from bank tellers and other staff published this week paint a disturbing picture of a workforce that is stressed, overworked, undertrained and ethically conflicted.
“To keep their jobs and feed their families, they are desperate and will do what is demanded of them – exceed their target – however they have to,” one bank worker wrote.
“The whole culture of selling products to customers even if they don’t really need them is not ethical,” wrote another.
“Sales target [is] more important than compliance and the customer,” wrote a third.
These and many other damning survey responses collected by the Finance Sector Union (FSU) are proof, according to the union, that the “root cause” of the recent bank scandals is a remuneration system that forces employees to foist insurance, savings accounts, retail super funds, loans, credit cards and other products on customers who don’t need them.
Bank employees are pressured into forcing extra products on unwilling customers.
FSU acting national secretary Geoff Derrick told The New Daily that bank employees are “just as likely to be victims of the system as the consumers” because their bonuses and pay are linked to demanding sales targets.
“These are targets imposed from the highest levels of the industry and they are forced down the food chain to the front line,” Mr Derrick said.
“If we change the pay system and recognise banking and finance as a professional service where there is a best interest duty owed to the customer, and pay people accordingly, then we will go a long way to fixing the problems we currently face.”
…The FSU survey was conducted in response to the Sedgwick review of banker remuneration currently being conducted by the Australian Bankers Association (ABA).
ABA chief executive Steven Münchenberg responded to a request for comment by praising the Sedgwick review and dismissing a royal commission as “unnecessary”.
“An independent review is being conducted by a former Australian Public Service Commissioner into how bank staff are paid, to help ensure that when people are rewarded for selling products and services they are putting customers’ interests first. This review commenced on 12 July and the Finance Sector Union is a member of the Stakeholder Advisory Panel providing input into the review. For more information, visit betterbanking.net.au.
I mean it when I say this: only in Straya (or NY). I mean, what is government for?
Happily, the Parliament is on the move, also from The Guardian:
The opposition and minor parties could force a rare and powerful “commission of inquiry” into the banks if the Coalition refuses a royal commission, according to the clerk of the Senate, Rosemary Laing.
And the Senate’s key parliamentary adviser said if the commission of inquiry bill won a majority in both houses it would be an outcome that “any government would find difficult to resist”.
Laing has advised the Greens senator Peter Whish-Wilson that parliament could establish the inquiry, similar to that set up to investigate former Labor minister and high court justice Lionel Murphy by the Hawke government.
“If the Turnbull government refuses to act on establishing a royal commission into the misconduct in the financial services sector then I want parliamentarians to know there is another powerful option for us to pursue,” Whish-Wilson said.
“If the executive won’t act on an issue important to the Australian people then the parliament must consider all its options.”
The difference between a royal commission and a commission of inquiry is the latter reports to the parliamentary houses rather than the government of the day.
It’s something.
