More sound than substance
One important ingredient was missing from last week's Senate Economics References Committee hearing in Canberra to which the most senior executives of Australia's major banking organisations had been summoned to appear.
That important ingredient was a failure on the part of those sitting on the Senate Committee to acknowledge that, for the most part, they were looking in the rear-vision mirror and discussing the industry as it existed between five and seven years ago rather than today.
So while the most senior executives of the Commonwealth, ANZ, Macquarie and NAB may have felt it necessary to apologise for the misdeeds which had occurred within their companies, they also pointed to the remedial action which had been put in place and which was still to be pursued.
Contrary to the breathless writing and associated headlines which have accompanied the sundry hearings of the Senate Committee, the financial planning industry is not in crisis. The only crisis it faces is one of unrelenting negative publicity.
None of this is to suggest that any of the failings of the major banking groups should have been downplayed or that their most senior executives should not have apologised for what occurred, but most of the narrative fails to recognise the degree to which many of the major issues have been addressed or are in the process of being addressed.
While there has been much raking over the coals by members of the Senate Committee there has, thus far, been precious few policy suggestions or strategies which might lead to improvement and which extend beyond the earlier FOFA efforts and the Financial System Inquiry. When South Australian independent senator, Nick Xenophon, and NSW Labor Senator, Sam Dastayari, last week canvassed a last resort compensation scheme they were doing no more and no less than reprising the year-old submissions of the Australian Securities and Investments Commission and the Financial Ombudsman Service.
This needs to be contrasted to the genuine reform agenda for the life/risk sector contained in the final recommendations of the Trowbridge Report. While a Money Management thought-leadership breakfast in Sydney last week confirmed the depth of disagreement which existed over the Trowbridge recommendations, no one was suggesting they did not represent a genuine attempt to fix the problems of the past, including allegations of churn.
Last week's Canberra hearing of the Senate Economics References Committee may have made for great theatre, but it did not break any new ground and in many ways diminished the good work of those within the major banks who have been working assiduously to overcome the problems of the past.
No one is debating the fact that wrong-doing occurred within the wealth management arms of the major banks and that consumers were hurt and should be compensated, but those who understand the workings of financial services will readily point to other sectors of the industry whose past and continuing practices also deserve parliamentary scrutiny.
It is time for the Senate Economics Committee to put aside the theatrics and come up with meaningful answers.
Mike Taylor
Managing Editor
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