Former executives at Australia’s largest banks are likely to be sent to jail as the fallout from the country’s Royal Commission gathers pace, according to a former competition regulator.
Earlier this week one of Australia’s biggest banks, Westpac, said it is expecting to cut 900 full-time advice roles as it prepares to drop its loss-making financial planning business.
This followed the nation’s 14-month long Royal Commission into misconduct in the banking, superannuation and financial services industry.
The bank said that the move “reflects the changing external environment, including a trend by financial advisers to operate independently, or in smaller advisory groups”.
It was also reported last week that the nation’s second largest bank, National Australia Bank, would turn off “grandfathered commissions” for advisers as part of its remediation process.
Speaking to Money Marketing, former competition regulator Calvert Duffy says the fallout from the commission is still being worked out in the financial services industry.
He says: “Senior former executives are likely to go to jail, and I am pleased to say Hayne [Kenneth Madison Hayne who led the commission] has said there should be no more legislation. He understands passing new rules does not mean people behave better.
“One of the things that will probably change is that certain provisions of good practice codes will become enforceable. There is currently a Treasury consultation open until the 12 April. In terms of how our experience can be applied to UK, we can see that pots, which are fairly small compared to Australia, will grow.
“There’s a danger people in the UK could become complacent, believe all is well and do not check under the bonnet to see if anything is wrong.
“That is what happened in Australia as new legislation was passed and codes of conduct published but there was no focus on complying with the principle of the law, which is to do no harm.”