Banking and Finance - Assignment

Added on - 28 May 2020

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Running head: BANKING AND FINANCEBanking and FinanceName of the Student:Name of the University:Author Note
1BANKING AND FINANCETable of ContentsIntroduction......................................................................................................................................2Literature Review............................................................................................................................2The Royal Commission...............................................................................................................2Recommendation.............................................................................................................................8Conclusion.......................................................................................................................................8References and Bibliography...........................................................................................................9
2BANKING AND FINANCEIntroductionThe Royal Commission into misconduct in the banking, superannuation and financialservices industry had been established on 14thDecember 2017 by the governor general of theCommonwealth of Australia, His Excellency General the Honorable Sir Peter Cosgrove AK MC(Retd).With increasing misbehavior of the financial services industry in Australia, thegovernment had declared a Royal Commission wholesomely into the banking institutions andother financial service institutions. The Government had allegedly stated that the RoyalCommission launched by it would take up a conventional and focused approach. The results ofthe Royal Commission are due on February 2019.Literature ReviewThe Royal CommissionA majority of the population in Australia are the potential consumers of banking,superannuation and other financial services. The superannuation system accounts for more thanover $2 trillion retirement savings pool and are growing rapidly, which has resulted in most ofthe Australians deferring income for their retirement (Merrington 2015).The matters into which the commission will investigate and inquire are as following:The type of the misconduct, its impact and extent by any financial services entity hasbeen intended to examine and scrutinyThe practices, behavior or operational activity carried out by a particular financialservices entity that does not meet up to the recognized standards of integrity andexpectations have also been investigatedThe royal commission has also been executed by the government to look into the existingregulations and mechanisms that evaluate the effectiveness of these regulatory proceduresthat control the conduct of the financial services industry
3BANKING AND FINANCEIt further carries out a scrutiny of the financial institutions by scrutinizing their existingpolicies and laws, internal controls that have been implemented within the organizationand the codes of conduct followed by the employees of the organization.The Commission also has enough independence to give due importance to the mattersthat it thinks to have greater potential to harm the societyThe Commission will not be required to investigate into or refer to any kind ofrecommendations in case of the macro-prudential policy, oversight or regulationsAn overview into the objectives of the commission primarily indicates that the RoyalCommission was a much needed action that had been finally executed by the government inorder to clear the irrational behavior by the banks and other financial institutions in Australia(Smith 2017).According to the sources, the major reasons behind the government of Australialaunching a Royal Commission in the financial sector of the economy had been that the banks ofAustralia had been going through one scandal after another over the past financial years. Thiscan be evidently cited from the incidents that have taken place in the banking economy since thefinancial crisis. After the financial crisis the banks in Australia had paid fines of amounts as hugeas $1 billion for unethically acquiring money from their customers or clients by fooling them(Smith 2017).The Commonwealth Bank in Australia had been dealing in money laundering practices,which involved 55000 breaches. There also had been other incidents, which triggered thegovernment to launch the Royal Commission in the banking sector. However, the major eventthat grabbed the attention of the entire world was that around 20 national Australian banks hadbeen sacked for inflating the real estate market by rapidly sanctioning bad loans or loans that hadno chances of being paid back by the customers, as they did not meet the credit worthiness. Thus,the Royal Commission was a rightly taken decision by the government (Coleman 2016).The primary motive of the banking industry that is accumulation of profit has alsohampered the integrity standards that have not been maintained by the banks. Moreover, thebanks in Australia did not have the necessary corporate governance structure. This means thatthe organizations had no particular clue in regards to the exact position where the responsible
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