In a paper issued today, the Actuaries Institute said large Australian companies and financial services institutions, like banks, need to develop deeper and more effective capabilities to monitor and assess social risks.
"How can it be that institutions spend huge amounts of money, resources and intellect on managing risk, and still find themselves being castigated by the press, politicians and social media for unacceptable attitudes and behaviour?" said the paper’s author, Ian Laughlin, who is currently chair of various positions at OnePath and ANZ, and was previously deputy chair at APRA.
“The government has freely criticised the banks, subjected them to intense parliamentary scrutiny, and has announced its intention to impose new law on accountability and remuneration. And now after much political battle, there is to be a Royal Commission into misconduct in the banking, superannuation and financial services industry," he said.
The comments come as a review by ASIC finds advice given to new customers by major institutions, including recommending an in-house superannuation platform, was laced with worrying levels of non-compliance.
The corporate regulator undertook a review into the products that ANZ, CBA, NAB, Westpac and AMP financial advice licensees recommend and the quality of the advice provided on in-house products.
As part of the review, ASIC specifically tested whether advisers were complying with best interests duty and other related obligations when recommending an in-house superannuation platform to new customers.
It collected a sample of customer files from the largest advice licensee for each institution to review the quality of advice being provided.
Overall, ASIC found non-compliant advice in 75 per cent of the customer files reviewed.
Mr Laughlin’s comments also complement the findings of KPMG’s research late last year into public trust, which concludes public trust is at “crisis” lows.
“Certainly this is consistent with the findings of the 2017 Edelman Trust Barometer, which indicates public trust in all of Australia’s major institutions has fallen, or even collapsed. Trust in business, in government, in media, in not-for-profit organisations – all have dropped to record lows,” KPMG said.
“In fact, we have just experienced the largest drop in trust in the Barometer’s 17-year history. There is increasing disbelief in the views of experts. Employees have more credibility amongst the general population than C-level executives,” KPMG said.
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