Financial services needs social license to operate
The financial services industry has lost its social license to operate because of the relentless scrutiny, inquiries, and regulation changes, according to the Australian Prudential Regulation Authority (APRA).
In a panel discussion at the Association of Financial Advisers (AFA) 2016 National Adviser Conference, APRA board member, Geoff Summerhayes, likened the industry to the mining industry, which needed to garner community support and prove the necessity of its existence.
"They changed the narrative about what they did and the narrative became employment, it became royalties and taxes, it became investment and growth," Summerhayes said, using a term coined by a Canadian mining executive in 1997.
"You now have a situation in Australia and elsewhere in the world where mining is seen as, you can't touch mining. Mining is fundamentally important to the economy and to the growth."
He referred to the Parliamentary inquiry into the big banks that was taking place close to the conference venue in Canberra, and said this was down to a leadership issue. He warned that government and regulatory intervention would continue if the leadership narrative did not change.
"Instead of talking about claims rejected, [talk about how] over 90 per cent of claims are paid when first submitted. Over 80 per cent of every dollar of premium is returned in claims to claimants," he said.
He also warned the industry to cease blaming one section of the industry over another and instead channel that energy to stakeholders outside of the industry to regain trust and confidence.
"There's no point tearing the industry apart from inside because all that will do is bring another layer of government and/or regulatory intervention," he said.
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