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.