The fundamental challenge in rebuilding the public’s trust in the financial services industry is putting the best interests of customers at the centre of organisational culture, decisionmaking and remuneration arrangements.
So says Dr John Laker, the chair of the Board of The Banking and Finance Oath and former chair of the Australian Prudential Regulation Authority.
He says Australia is not alone in facing the challenge of rebuilding trust in financial institutions. ‘The decline in trust has been a global phenomenon; other countries wracked by major banking failures and scandals have had to face the challenge earlier and although progress is being made, trust lost takes a long time to regain.
Laker notes that, up to a few years ago, the story of the Australian financial system was a very positive one. Strong capital footings, conservative risk management, and robust regulation and supervision all helped banks emerge from the crisis largely unscathed compared to other countries. As he told a recent global conference, that positive retrospective has turned instead into a cautionary tale.