The Financial Services Council has backed the federal government’s decision to increase civil and criminal penalties for misconduct in the wake of the royal commission.
On Friday, Treasurer Scott Morrison announced that the government will be seeking reform of the Corporations Act to bring about what the government says is the “most significant increases in maximum civil penalties in 20 years”.
The announcement followed Mr Morrison’s description of conduct by financial institution AMP as “deeply distressing” and possibly serious enough for individuals to face jail time.
In response, the Financial Services Council — of which AMP and the big four banks’ wealth management divisions are members — has issued a statement welcoming the decision to bolster penalties.
“There is no place for criminality in the financial services industry and wrongdoing should be met with the full force of the law,” said FSC chief executive Sally Loane.
“It is entirely appropriate that penalties for civil and criminal misconduct are as strong as possible.
“Consumers must have confidence that the individuals and organisations they entrust with their savings will act in the right way.
“Both effective enforcement of the law as well as severe punishments for wrongdoing are central to promoting better trust and confidence.”
The statement comes despite the FSC previously mounting strong opposition to the notion of a royal commission into the financial services industry.
Speaking at a Pritchitt Partners event in Melbourne in July 2017, Ms Loane said that a royal commission would prevent self-regulation efforts.
“We are uniquely placed to take up the mantle of consumer reform so that the government can get on with its job of governing,” Ms Loane said.
“Proving as an industry we can regulate ourselves also strengthens consumer trust in the sector. In this light, we are concerned about a proposal that could act as a handbrake on self-regulation.”
Ms Loane said at the time that she was concerned that previous inquiries had already cost the industry $3 billion.
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James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.