by Dr. Andrew D. Schmulow
Published electronically by The London Institute of Banking & Finance.
Andy Schmulow examines what the scandal at Australia Westpac bank shows about wider failures of governance and culture in financial services and the need for personal accountability at the top.
As part of a panel discussion in late 2018, I was asked whether the findings of the [Australian] Royal Commission – into misconduct in the banking, superannuation and financial services industry (the Hayne inquiry) – would be the end of the problems facing the banking industry in Australia.
My response was that not only were we not at the end of the scandals – we were barely at the beginning.
Misconduct in Australia’s financial industry is as a result of a significant deterioration in culture and a relentless drive for profit.
Compliance departments have been starved of resources, and disempowered. Investments in infrastructure – like IT platforms capable of complying with a bank’s anti money-laundering and counter-terrorism financing obligations – have not been made.
Don’t forget, those obligations are laid down in legislation, and integral to bank licence conditions. We have witnessed leadership in these institutions incapable of reading the writing on the wall – writing large enough to be read from space.
Take two examples.