Posts in Culture
Compliance, Culture and Compliance Culture

Smarter compliance. Despite their focus on conduct and disclosure, Regulators are increasingly turning their attention to licensees’ ‘culture’. It’s a reasonable approach if one ignores the reality that the definition is circular and that organisational culture is not monolithic; most large institutions are collections of disparate and disconnected cultures. Nevertheless, Regulators show no sign of abandoning this idea, so Licensees must consider how they can best demonstrate a ‘good culture’ and their commitment to key principles. Drawing on international examples, this article proposes ways in which this can be done.

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Oughts and Crosses: The changing role of licensee management

2018 has been a tumultuous year for licensees and advisers. The introduction of the Life Insurance Framework, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the collapse of Terry McMaster (followed quickly by the collapse of Dover) have buffeted an industry already reeling from prolonged media and political pressure. Assured Support engages with businesses and advisers across Australia and this gives us an enviable perspective of our industry. Here are our top five observations of, and predictions for, the financial services industry.

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Forget 'Culture'. Let's talk about consequences

The Regulator’s focus on culture underplays the agency of management, staff and advisers and provides a convenient excuse for poor choices. Rather than focusing on culture, perhaps its better to focus on consequences. Consequence Management is not a complete solution (monitoring, supervision and remediation are equally important) but focusing on consequence management is an effective and efficient way to create and maintain a good corporate 'culture'. Properly applied, it may also spare you adverse publicity. 

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Honesty, integrity and best interests

If you're an advice professional, you know that misconduct, mismanagement and consistently critical media coverage has undermined confidence in our industry and led calls for increased regulation. We have the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and, recently, the Australian Securities and Investments Commission pursued two high profile matters based, to a large degree, on the Licensees' failures to ensure that their representatives complied with the law and complied with their 'best interest' duties. In this article we take a constructively critical look at the duty, the conduct that necessitated it and the practicalities of satisfying your professional duties. (Hint - disclosure is not enough).

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Trust, Culture and Enforcement

On 12 September 2017, ASIC Chairman Greg Medcraft presented at the Thomson Reuters Newsmaker event and articulated his view that ASIC is primarily an enforcement body responsible for promoting investor trust and confidence in financial services. With reference to the ongoing actions involving Commonwealth Bank, NAB and a range of smaller licensees, the Chairman discussed ASIC's priorities and addressed a variety of topics including trust, reputation and culture. This article explores the reasons, consequences and implications of those views. 

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Who watches the watchers?

ASIC Report 515 "Financial advice: Review of how large institutions oversee their advisers" reported on ASIC's review of 160 client files that had previously been reviewed by the Licensees themselves and identified the discrepancies. Conflicts, capability and culture are the main problems but systems, processes and purposes also have significant impact. (Our companion post addresses systems, processes and purposes in more detail)

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What Wells Fargo taught us about culture and compliance

Culture. Compliance. Misconduct. In a year of scandals, regulatory action and relentless media scrutiny, the failure of licensees – or their highly paid and well-promoted management teams – to honestly assess and check their own conduct is both incredible and disheartening, but it's not just an Australian problem. Focusing on the Wells Fargo scandal this post explores how "culture", conflicts and conformity can compromise ethics, vision and values. It also offers ten (10) tips that businesses can follow to avoid similar public scandals. 

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Wading in the shallows: Advice, ASIC and Accountability

On 26 June 2014, The Senate’s Economics References Committee published its report on the performance of the Australian Securities and Investments Commission. The report has been widely covered in mainstream media. Although presented as simply an assessment of ASIC’s performance based on two distinct case studies, the report was highly critical of both ASIC and the Commonwealth Bank of Australia; criticisms relentlessly pursued and compellingly presented by Adele Ferguson in her articles for Fairfax and in her Four Corners’ story. The Committee made 61 recommendations and a number of observations about both ASIC and CBA. This article is a high level review of the more interesting aspects.

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Gliding over all: Beyond Banking Bad

Although it’s difficult to assess its impact on the broader community, there is little doubt that Four Corners’ “expose” of Commonwealth Financial Planning generated contemplation, conversation and consternation in the financial services industry. The recent story “Banking Bad” by Adele Ferguson and Deb Masters focused on the sales-driven culture inside the Commonwealth Bank's financial planning division; but it also raised additional questions about the structure and composition of the broader advice industry.

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Crises of culture

A recent report on the financial services industry noted that while industry executives "champion the importance of ethical conduct …. they struggle to see the benefits of greater adherence to ethical standards". So how do we reconcile statements that "ethical conduct is just as important as financial success at their firm" with acknowledgements "that strict adherence to such codes [makes] career progression difficult." What does this contradiction really mean for Compliance Managers and shareholders?

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