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Australian business regulators will be subject to a new supervisory body as part of a reorganization of the banking sector recommended by a major independent survey on greed and financial malpractices on Monday.
The government-appointed inquiry, known as the Royal Investigation Commission, also said in its landmark report that compensation structures across the industry should be reorganized to remove conflicts of systemic interests.
The commission's recommendations were released by the government after 11 months of shocking revelations of financial malpractice that swept $ 60 billion (US $ 43.45 billion) from the country's major financial stocks.
"The price paid by our community has been immense and goes beyond the mere financial aspect," said Australian Treasurer Josh Frydenberg, as the government promised to follow through on all the recommendations.
"Businesses have been broken, and emotional stress and personal pain have shattered lives."
The recommendations of the survey have yet to be approved by parliament.
The investigation revealed that wrongdoing had reached the upper echelons of the sector, the largest wealth manager, AMP, had misled the board by misleading a regulator of the deliberate indictment of clients for financial advice that he had never donated, which had cost his manager, his president, his CEO and several directors. .
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The final report of former Supreme Court Justice Commissioner Kenneth Hayne revealed that the industry's problems were exacerbated by companies' unwillingness to take responsibility.
"That is to say, some entities remain reluctant to train and then give concrete effect to their understanding of what is ethical, effective, honest and fair, and what to do," says The report.
Prior to the release of the report, shares of the "big four" banks all closed up about 1% as investors hoped the report would end at least months of uncertainty in the sector.
However, wealth managers, whose reputation was undermined in the survey, were punished by the closure of 4.5% of IOOF Holdings shares and the decline in the number of places occupied by the MPA. The enlarged market closed up 0.5%.
Businesses were broken, and emotional stress and personal pain shattered lives
Treasurer Josh Frydenberg
The Royal Commission made 76 recommendations in its final report, including refocusing on prudential and prudential regulators, which it believes should be submitted to a new supervisory authority.
During the 68 days of hearings before the Royal Commission, regulators have been regularly accused of having worked too much with the banks. The investigation revealed that the misconduct went unpunished or that the consequences did not reflect the seriousness of what had been committed.
The Royal Commission used its final report on Monday to urge regulators to use notices of breach for administrative breaches, rather than problems that should be brought to a judge.
Institutional irregularities revealed over the past 12 months have hurt some of society's most vulnerable clients, as shown by the case of a blind retiree who was persuaded to secure a loan without warning him of the risks.
In another incident, an insurer used aggressive selling techniques to sell an opaque product to a young man with Down syndrome.
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The report indicates that 24 cases of corporate misconduct, including the widespread imposition of fees for services not rendered, have been referred to regulatory authorities for possible prosecution.
In 2018, investors reacted to the tough hearings of the Royal Commission by withdrawing their money from insurers, banks and fund managers tarnished by the brand. Shareholders expressed their disgust by voting against the executive compensation plans of two of Australia's largest financial institutions, the National Australia Bank and the Australian and New Zealand banking group.
The two big banks, alongside the Commonwealth Bank of Australia, the Westpac Banking Corporation, and the wealth managers AMP and IOOF, were among the hardest hit by the survey, although a widespread irregularity has also been reported in other sectors, including insurance.
The Royal Commission's report is ahead of the May elections, which polls suggest would lead to the victory of the left-wing Labor Party. The Labor Party says it intends to adopt all the recommendations of the commission.
Conservative Prime Minister Scott Morrison, who initially rejected Labor's calls for an investigation into the banking system, calling them "populist vexations," said that he also plans to follow up on most of the recommendations.
But he warned against outbidding and reducing credit flows, a likely battle line for the government as it fights for election survival.
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