Given the key issues which the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry did not traverse, the Commissioner, Kenneth Hayne, should have sought an extension from the Federal Government.
Hayne explained his decision not to seek an extension on the basis that the issues he was dealing with were significantly grave and central to the health of the Australian economy and that he therefore needed to act promptly. What is more, he suggested that even an extended Royal Commission could not have provided a remedy for all of those who complained.
Notwithstanding his reasoning, Hayne should have sought an extension because as important as his findings and recommendations appear to be, they fall well short of having provided thorough scrutiny of a highly complex industry and the timing of his final report falls far too close to the tumult of a Federal Election to allow for appropriately balanced consideration and rationally-measured implementation.
The final report of the Royal Commission is a story of hits and misses with many suggesting that the share prices of the major banks revealed a significant miss, while the focus on mortgage broker commissions revealed a significant but perhaps ill-directed hit.
While few in the financial services industry will disagree with the Royal Commission’s criticisms of the past conduct of the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), it is arguable that many will disagree with the light touch with which it dealt with industry superannuation funds.
Equally, while a significant proportion of the financial planning community will continue to lament the seemingly inevitable end to grandfathered commissions in 2021, they might wonder why more was not said about the consequent impact on buyer of last resort arrangements.
However, while Hayne’s final report is open to criticism, it should be welcomed for the manner in which it clearly identified the reality that boards and senior executives, not planners alone, were the substantial progenitors of fee for no service and that it is they who should be identified and made to pay a price.
The Commissioner stopped short of naming individual names, but made clear that he had passed information to ASIC and APRA for action. In turn, the chair of ASIC, James Shipton, said the Commissioner’s recommendations would be prioritised.
The bottom line therefore seems likely to be that over the next 12 months ASIC is likely to announce a number of prosecutions against current and former senior executives and board members based on some of the more egregious issues dealt with by the Royal Commission, particularly fee for no service.
It will then be up to the courts to decide, but many will question whether justice has really been served.