Misconduct in Banking: AMP Limited Case Study

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Banking Theory and Practice

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Table of Contents
1. Introduction...................................................................................................................... 2
2. Analysis of the Issue/Misconduct......................................................................................3
3. Parties Involved in the Misconduct...................................................................................4
4. Royal Commission Recommendations..............................................................................4
5. Analysis of an Article.........................................................................................................6
6. Recommendations............................................................................................................ 7
7. Conclusion.........................................................................................................................9
8. References...................................................................................................................... 10

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1. Introduction
The Royal Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry (the Baking Royal Commission) was established by the Australian
Government on 14th December 2017 pursuant to the Royal Commissions Act 1902 (Legg,
2019). The objective of this commission was to inquire and report on misconducts
committed by major banking corporations in the banking, financial services, and
superannuation sector. The implementation of this commission highlighted many shocking
issues in the sector which are conducted by Major Australian banking corporations that
leads to violation of many legal provisions. The Banking Royal Commission published its
finished report on 1st February 2019 in which it examined and identified many issues, causes
and responses and recommendations (Royal Commission, 2019). The objective of this paper
is to evaluate an issue or misconduct which is identified by the Royal Commission and
identify the parties that involved in these misconducts and describe how they are affected.
The issue which is selected in this report is highlighted in the fourth observation of this
report which provides that financial services, often time, broke the law and they were not
properly held accountable for their actions. An example of AMP Limited will be evaluated in
this case to evaluate this issue. This report will evaluate the recommendations made by the
Royal Commission for this issue. A media article will be selected in this report to analyse
how this issue has been reported and evaluate the perspective of the author. Lastly, this
report will provide suggestions to effectively resolve this issue and evaluate whether this
issue was sufficient to form part of the Royal Commission’s final report.

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2. Analysis of the Issue/Misconduct
One of the key issues which are highlighted by the Banking Royal Commission in its final
report is that the banking corporations and their members who engaged in misconduct did
not face any legal consequences. The Royal Commission provided that financial services
entities broke the law too often and they were not properly held accountable for their
actions (Royal Commission, 2019). Misconduct will be deterred only if the parties who are
engaging in the misconduct know that it will be detected by superior authorities and they
will be denounced and justly punished for those actions. However, in the case of banking
corporations, the misconduct, especially related to profits, is not deterred in the industry
and those who engaged in the misconduct do no more than paying compensation for their
wrongdoings. These wrongdoings were not denounced to the public by issuing a media
release. It is expected in the Australian community that if an entity violates any law and
cause damage to its customers, then it will be responsible for compensating those
customers (Remeikis, 2019). Moreover, the community also expects that the entity will be
held accountable for their illegal actions and regulators will recognise their illegal actions,
and they will take reasonable steps to ensure that the wrongdoer compensates those who
were harmed.
The final report of the Banking Royal Commission provided that it is common for banking
corporations to engage in misconduct, still, they were not denounced by the regulators even
when they prioritised profit generate above the interest of customers. The Banking Royal
Commission provided various recommendations in order to increase accountability of
financial services providers to ensure that they face appropriate legal consequences for
their illegal actions (Financial Review, 2019). In order to understand this issue, the example
of AMP Limited can be analysed which is one of the leading financial services company in
Australia. During the investigation of the Banking Royal Commission, there were around 20
occasions in which the company was found guilty of blatantly lying to the corporate
regulators without facing any legal consequences (Ferguson, 2018). Moreover, a whistle-
blower provides evidence regarding the actions of the company in which it interfered with
the “independent” investigation conducted by the Australian Securities and Investment
Commission (ASIC) (Letts, 2018). The company did not face any legal charges for this