It's not just the banks that need to up their game

If 2018 was the year of the banking royal commission, 2019 should be the year of action, as the government implements its recommendations.

But if you think that the implications of the royal commission are limited to the banking sector, think again. Commissioner Kenneth Hayne laid out some simple expectations that any CEO would do well to heed.

Some of these are basic: obey the law, act fairly, don’t mislead or deceive. We shouldn’t need a royal commission to state the obvious, but a quick look through the businesses taken on by the ACCC in the past year shows that we still have a problem. Telstra, Optus, Qantas, Virgin and Woolworths all make the list – suggesting that as in banking, even large corporations can’t be relied upon to do the right thing.

Commissioner Hayne also said that there should be no ‘hawking’ of financial products which, these days, is mainly conducted over the phone. While we’ll soon be protected from calls pushing superannuation and insurance, why not extend this ban to other businesses?

Perhaps the most controversial – but in CHOICE’s view, necessary – recommendation was to get rid of conflicted remuneration, such as the commissions that banks pay to mortgage brokers. The line of reasoning is that if somebody claims to be there to help you, then that’s what they should do. You can’t rely on this if they’re being paid by a business to push its products.

Again, these sorts of payments aren’t unique to banking. Services that claim to help you to find the best energy or broadband deal rarely do – and that’s because they’re paid by energy and broadband businesses to recruit customers. If we can’t trust these businesses to do the right thing for consumers, maybe it’s time to question the sales commission model that drives them.

Finally, Commissioner Hayne said that banks should put their customers’ interest first. This goes to the heart of our system of companies, challenging the idea that the interests of shareholders should be the priority of boards and executives. While the royal commission stopped short of recommending a change to the law, there’s an important message here for other companies.

Our major industries – banking, energy, telecommunications and retail – are dominated by a few large companies that enjoy enormous market power. Many of them have built their brands on claims of service to the Australian community. But in the wake of the royal commission, customers will increasingly expect these marketing claims to be backed by action, to demonstrate that businesses are really putting their customers first.


Totally agree.

Unfortunately we had a fundamental belief that business would act morally and ethically. This possibly occurred in the ‘old days’ when the owners and/or managers of small businesses were also part of a relatively small community and interacted with their clients on a regular basis.

Now-days the owners and managers are totally removed from their clients and customers.

The principle of business being a corporate person that is an ‘entity’ the same as a person was perhaps appropriate in the 1800’s, but not now due to the size and market dominance. The idea of looking after the customer/client has all but disappeared in these megaliths, as in the industries @AlanKirkland mentioned above.

I think it is time to stop treating the symptoms and start treating the causes. A ‘macro view’ needs to be taken of all the recent (and past) Royal Commissions. It is clear that large organisations (including the religious ones) consistently put their needs and well-being first.

A serious reformulation needs to be done at the highest level of what a business/corporation is, and what is expected of it. For example, I believe the ‘entity’ status is outdated, needs to be abolished and replaced with a new paradigm which treats bigger businesses differently to SOHO, sole traders, and small partnerships etc. The paradigm needs to encompass a set of morals, ethics and behaviours that they must abide by including putting the needs of the customer first when providing a product or service.

Good on Choice for rattling the cage, but we need to push for a high level and fundamental review of the inter-relationships between business, Governments (including taxation etc.). and consumers/clients.

Then we as a nation need to start making changes before the big business are more powerful than our Governments.


Hi Alan. It is important that the law is enforced or there is no point in having laws. This is the law that is applicable to many of these situations that were revealed by the Royal Commission Into Misconduct In The Banking, Superannuation And Financial Services Industry (in my opinion): The consequences of which is yet to become apparent. The experiences of the United Kingdom is a good example of what happens when laws are not enforced and consumers are not protected: However, the UK have now learnt their lesson and moved to a Single Financial Guidance Body. The consumers in Australia are very vulnerable to negative equity and its consequences.

I am very disappointed that Australian Consumers Association do not appear to have a voice in the Australian Financial Complaints Authority or the post Banking Royal Commission Remediation Process. Alan, what is the status of the representation of the ACA on these bodies? I am sure that many supporters of the ACA would like to know, as well as myself.


John Cosstick


If by the old days the suggestion is the 1700’s or 1800’s up to the end of the Victorian era, the same issues confronted the average consumer or worse. While we have come a long way relative to then in consumer rights and democracy (in some nations), the basic system of corporate identity and legal precedent has changed little.

You only need to look to the behaviour of the East India Company and any number of industrial eneterprises that followed. The larger they were the worse they behaved. The British Crown and Govt fell over itself in support, adding to the misery through the system of hereditary title and land ownership.

It’s bold to suggest we seek out the root cause, and consider fundamental reform. It’s notable that many of the positive past changes affecting how corporates behave have however only required two things. Regulation and enforcement. Perhaps we should display the acronym for the “accc” as such in lower case until such time as it can be shown to be effective.

I can see why @AlanKirkland has stressed the importance of keeping a focus on the changes in behaviour required from many corporates. Conflicted renumetation is just one aspect.

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You are right of course. The firms which went overseas had no, or displayed no moral scruples.

I was thinking about smaller businesses dealing within countries, though I am sure there were many who exploited the working class.

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Hi John,

Rest assured - we are involved!

I was on panel that did the Ramsay Review into complaints handling in the financial system, which recommended the establishment of a compensation scheme, which was in turn backed by the Royal Commission. The government and opposition have both committed to acting on this recommendation.

Our Director of Campaigns and Communications, Erin Turned, is on the Board of AFCA, although she is not a CHOICE representative as such because AFCA directors are appointed on the basis of their expertise rather than organisational affiliations.

At this stage, much of the detail of how remediation and compensation processes will work will depend on the outcome of the federal election but rest assured that we will be in there, expressing views about how they should be designed to work best for consumers.



I was thinking more generally.
Eg The railway mania that gripped 19th century GB. Many shareholders lost all to opportunistic directors. Many rich and poor died in railway accidents, because profit came before safety.

Alternately the dealings of the Union Pacific and Central Pacific Railroads in the 1860s during the construction of the Transnational Railroad in the USA are equally dubious. There were misdealings and underhanded business that ripped off the governement as well as other investors.

Shareholders of majority owners came first in every instance. Public need a distant second in justifying the means. Customers a poor last place.

There may be fewer standout examples in Australia’s history. The behaviour of the NSW coal mine owners in the 19th century? The anti-competitive arrangements known as the vend might be a good example. Effectively an owners cartel to ensure a minimum selling price for all coal.

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Hi Alan, Thanks for the reply. I am glad that this is the case. I was on the panel that wrote the examination questions for the certification of financial planners for The Financial Planning Association of Australia in 2004. We were aware then that we had problems that needed to be fixed to prevent losses. It takes a long time for systemic weaknesses to come through the systems and result as losses to consumers. That is why your voice and representation is critical. In my view the main weakness and vulnerability is the need to protect the hundreds of thousands of young Australian families now already deep in debt and in negative equity. It is also a global issue and needs to be understood by those who have never worked in banking or financial planning because it is clear that many politicians and regulators are not aware of the dangers. I have made sure that there will be no excuses that they were unaware of this issue: Negative Equity - What the Banks Don’t Tell You: How to Take Control of Your Home Loan Repayments and Budget. This publication ranks at the top or close to the top globally in Amazon search.

Alan, keep up the good work in representing consumers so that they are treated fairly and reasonably predictable problems are headed off. We do not want another case of this:


John Cosstick

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