- Westpac CEO Brian Hartzer has cautioned about unintended consequences of new legislation and regulation aimed at poor conduct by the banks.
- He says regulatory changes could impact how much individuals can borrow for a home.
- And simplifying current regulations could be a better path rather than new and tough rules.
Brian Hartzer, the CEO of Westpac, has told a parliamentary committee that tougher regulation alone won’t solve the risk of poor conduct at banks.
He told the committee that 2018 had been a year of unprecedented scrutiny for banks with the financial services Royal Commission, legal action by corporate regulator ASIC, financial intelligence agency AUSTRAC, and the consumer watchdog ACCC, plus the Productivity Commission’s review of competition, and the introduction of the BEAR (Banking Executive Accountability Regime) by prudential regulator APRA.
Hartzer says the impact of these actions on banks is significant and ongoing.
“The issues they have raised are confronting, and on behalf of Westpac I would like to once again apologise unreservedly to any customer we have let down,” he says.
Previously he had opposed the establishment of the royal commission. He now calls it a “valuable and rigorous process”.
The financial services royal commission has labelled the actions of the major four banks — including charging for services not provided — as dishonest and the result of greed.
“New regulations and tougher sanctions alone are not going to solve the risk of poor conduct,” Hartzer told the committee.
“And in this, we fully support (royal) commissioner (Kenneth) Hayne’s observation that simplifying current regulations could assist in reducing the potential for poor customer outcomes.
“All of us want a strong banking system that delivers good outcomes for customers and the economy as a whole.
“To achieve this, we need our bankers to exercise good judgment in a world that is often grey — where the most important question is what should we do, rather than what can we do.
“At Westpac we recognise that building a strong service culture is essential to winning back trust – one where everyone in the bank feels safe to speak up, knows what is expected of them, and is supported to make the right decisions for our customers.”
He also cautioned about unintended consequences of new legislation and regulation.
“While overall economic growth remains sound, we are seeing increasing uncertainty, especially among the consumer and small business sectors,” Hartzer says.
“House prices are falling, income growth has been low, and consumer spending is likely to be affected by people’s confidence in the value of their home.
“Therefore regulatory changes that impact how much individuals can borrow, the cost and availability of credit for business, or the availability and affordability of suitable financial advice should be considered carefully.”
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