Culture is not the issue with banks
Arguing that banks have a culture problem is avoiding the discussion about what the issue is really about, the head of the Financial System Inquiry, David Murray, believes.
Speaking at the Actuaries Institute on Tuesday, Murray said that while banks, like all other industries, made mistakes and occasionally acted in unconscionable ways with their customers it did not have systemic law breaking.
"It seems very easy to get people wound up politically by saying that there is a culture problem. The culture of an organisation is the set of beliefs in the organisation," Murray said.
"Those beliefs are derived from the behaviour of the chief executive and the board, and the systems the company has in place to run the business and those systems are both technical and human. And they're equally important in driving beliefs."
Murray said if a bank implemented a new IT system and employees found problems with the system they would often try their best to work around the problem.
"Not because they're criminals, but that they are people trying to do a good job. It's in the work around process that is where the problem starts," Murray said.
"Most people don't read the APRA [Australian Prudential and Regulation Authority] prudential standards, they do not read the Corporations law, they don't know the Trade Practices Act, their executive are supposed to work that out.
"So it could be that when they work around things they work around the basis that it could be illegal, disreputable, unauthorised by the organisation, or unproductive rather than more productive, but that they just do not know."
Murray said great organisations tested what was going on and rectified issues all the time but that they could not do that if they were not reading the beliefs of the people.
Recommended for you
The Emerge Foundation, a charity run by financial advisers and fund managers, has announced a scholarship program to help veterans transition into tertiary education.
The JAWG has announced it is in talks with Treasury around five “core principles” to strengthen the education standards for new entrants to the financial advice space.
TAL has introduced four new courses to its Risk Academy focused on ethical dilemmas as part of Ethics Month to help advisers meet their CPD requirements.
Unadvised Australians believe they need $2 million to retire comfortably, according to Colonial First State, a wide variance compared to advised individuals which estimate $1.3 million.
