The corporate regulator believes that “a lot of hard work” is needed for financial service operators to regain trust from the community as damning evidence is heard by the Hayne royal commission.
Speaking at the Audit and Risk Committee Forum 2018 in Melbourne on Tuesday, ASIC commissioner John Price said that mortgage brokers should behave to the same standards that one would expect of their doctor.
“Trustworthy relationships are predictable in their nature. You expect your doctor to be looking after your interests at every visit. Certain things about your relationship with your doctor are givens — that your information will be managed confidentially and privately, your symptoms will be assessed competently and carefully, and your doctor will behave ethically,” Mr Price said.
“You would have no reason to expect your bank, financial adviser, broker or the director of a company to behave with lesser standards.”
Mr Price noted that the financial ecosystem is “complex” and that adults today need to make more financial decisions than previous generations. However, he expressed doubt over how trusted the financial services industry is in the eyes of the Australian community.
“I think that there would be little argument between us here today that in the public’s mind, the words ‘trust’ and ‘financial services’ do not currently sit easily together,” Mr Price said.
“Indeed, the royal commission will assess whether conduct, practices, behaviour or business activities by financial services entities have fallen ‘below community standards and expectations’.”
The royal commission is now in its third round of hearings. This week, it has been looking into small business lending, questioning banks and reviewing a number of case studies where small businesses have failed. The commission is also probing the role of loan guarantors.
On Monday, the commission heard from disabled pensioner Carolyn Flanagan, who sought legal advice after being told by Westpac that her home would be sold to recoup losses incurred by the bank after her daughter failed to repay a business loan in which she was signed to as a guarantor.
“There will need to be a lot of hard work on the part of the financial services sector and regulators to regain trust and there must be courage to do something differently to stem the tide of distrust,” ASIC’s Mr Price said.
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.
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