ANALYSIS: It’s time to do away with bank-initiated misconduct inquiries

by Dr. Andrew D. Schmulow

Published electronically by Thomson Reuters Regulatory Intelligence, (2018).

This author argued consistently for a Royal Commission, and took what appeared to be a safe bet by predicting that what had been in the press was the tip of the iceberg.

Confession time. It was a guesstimate based upon a consistent and observable trend. It was not data-driven, and as a result was a monumental under-estimate. The Royal Commission has been a metaphorical bloodbath.

The evidence to date is of a state within a state, impervious to the law, with a compulsion to deny, trivialise, obfuscate and lie about how much had gone wrong. There were “mistruths” about what steps (if any) had been taken by way of remedies, whether clients had in fact been remunerated as had been asserted, including in cases where banks were under an enforceable undertaking to do so, or indeed even told they were eligible for compensation — sometimes 10 years after the fact.

Fraud, bribery, false documentation, forged signatures, impersonating customers, failure to verify customer income, failure to assess expenses, failures of internal controls and failures to report misconduct to the Australian Securities and Investments Commission (ASIC) is but a general list.