The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has cleared the way for criminal prosecutions, with the Commissioner, Kenneth Hayne arguing that, too often, financial services entities that broke the law were not properly held to account.
Hayne said primary responsibility for misconduct in the financial services lay with the entities concerned and those who managed and controlled those entities – “their boards and senior management”.
“Misconduct will be deterred only if entities believe that misconduct will be detected, denounced and justly punished,” he said in the royal commission’s final report.
‘Misconduct, especially misconduct that yields profit, is not deterred by requiring those who are found to have done wrong to do no more than pay compensation. And wrongdoing is not denounced by issuing a media release,” Hayne’s report said.
“The Australian community expects, and is entitled to expect, that if an entity breaks the law and causes damage to customers, it will compensate those affected customers. But the community also expects that financial services entities that break the law will be held to account,” the report said.
Hayne said choices now had to be made.
“The arrangements of the past have allowed conduct of the kinds and extent described here and in the Interim Report of the Commission. The damage done by that conduct to individuals and to the overall health and reputation of the financial services industry has been large. Saying sorry and promising not to do it again has not prevented recurrence.”
“The time has come to decide what is to be done in response to what has happened. The financial services industry is too important to the economy of the nation to allow what has happened in the past to continue or to happen again,” Hayne’s report said.