Analysing Banking Royal Commission: The Role of Ethics and Dignity

This case study critically analyzes a news article related to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Australia, focusing on the role of ethical values and human dignity in economic decisions. It identifies key issues such as unethical behavior by banks, mistreatment of farmers, and charging fees for no service. The analysis incorporates relevant economic concepts and critiques the article's findings, highlighting the commission's recommendations for compensation, regulatory overhaul, and ethical reforms within the banking sector. The study concludes by emphasizing the importance of ethical conduct in financial institutions and the need for robust regulatory frameworks to prevent future misconduct, referencing the government's commitment to implementing the commission's recommendations and the ongoing debate regarding their effectiveness. Desklib provides a platform to access similar case studies and resources for students.

Running head: ECONOMICS
Economics
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Author note

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Link: ABC News. (2019). Banking royal commission report at a glance. [online] Available
at: https://www.abc.net.au/news/2019-02-04/banking-royal-commission-report-at-a-glance/
10777188 [Accessed 2 May 2019].
The Royal Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry in light of the role of ethical values and human dignity in economic
decisions.
Introduction
Superannuation and financial services industry are also termed Banking Royal Commission
which have established in the year 2017. Many factors have contributed to misconduct in the
financial service industry in Australia. It have been found that in some of the cases, the
boards of the companies of superannuation funds have collectively engaged in unethical
behaviour to match to some of the employees. Ethical values signify what is worthwhile and
important in nature. Ethical values are important since they help us to grow and develop.
Discussion
The news article states that there is a high chance that the banks might be facing criminal
charges after the publication of report by royal commission. The article states that some of
the banks in Australia can face criminal charges for charging fees foor no service The issues
stated in the article are that some of the banks are found to engage in unethical behaviour,
farmers have complained about the treatment hey receive from banks and the banks are also
charging fees for no service.

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Concepts
The Australian Securities and Investment Commission are known to become the primary
conduct regulator overseeing superannuation. The Royal Commission into Misconduct in the
Banking, financial services industry and superannuation had established in December 2017
by the Australian government who persuaded the Royal Commission Act 1902. The article
(ABC News. 2019. Banking royal commission report at a glance) also stated that farmers
have complained of being ill treated from the bank members. The farmers were also the
campaigners which lobbied for the royal commission. After all these took place the
government then agreed for creating a scheme related to farm debt which will be assisting the
borrowers in order to overcome financial difficulties.
Critique
The banks have known to face prosecutions over the misconduct recently. The
banking royal commission known to have called for compensation. The commission was also
known to overhaul the financial regulators. The commission Kenneth Hayne in his final
reports offered more than 76 recommendations that the Federal Government will implement.
The royal commission known to have heard cases of customers being charged for the services
which they had never received. The final report have also stated that the scandal will cost the
wealth managers and an amount of $850 will have to be compensated by the banks (O'brien
2019) Some of the scandalous cases which are involved are that people were being charged
with exorbitant fees even after they had died.
The Commissioner had made 76 recommendations for how the problems can be fixed.
Bankers in the report were not been named, however Kenneth Hayne had laid out the
potential for more than 20 prosecutions which involved the major banks. (ABC News. 2019).

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The recommendations in the report stated that the mortgage brokers should be acting to the
borrowers interest. The consumers will be protected by clarifying the selling procvisions that
comprised supperanuation products. . The article also stated that there will be presence of a
compensation scheme of the last resort that is being funded by the banks. The report also
points out that there should be an end to the practices such as conflicted remuneration. The
banks should also impose more inclusive practices for the people of Aboriginal and Torres
Strait islands. Hayne have submitted the interim report on September 2018 on how much
have the Governor general progressed However, the report published by the Royal
Commission did not specify the name of any individual who should be facing the criminal
charges (Knaus 2019). Instead of naming any specific individual banks, the report stated
many recommendations which are related to the dishonest misconduct and also known to
have charged. (ABC News. 2019).
Ethics are about the virtues and values which connect intimately to the economic
issues. Business ethics are known to focus on identifying the moral standards. The banks
might also face criminal charges after the report is published by the royal commission.. The
government although have agreed to act on all the 76 of Hayne’s recommendations
(Remeikis 2019).since the banks might face criminal prosecution for charging fees for no
service offered , the government’s plan is to introduce a compensation scheme of the last
resort in order to help the customers who were the victims of the banking misconduct the
banking industry will be funding the scheme. Some of the critics also stated that the royal
commission have not gone enough far enough and have also failed for recommending the
major structural changes.
The Financial Sector Union which is known to represent banking, insurance, finance
and superannuation stated that the changes made by the banks were mostly cosmetic in nature
and will not produce any systemic change(Knaus 2019). The licensing system is known to be

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strengthened for ensuring licensees for meeting their obligations. Hayne have deliverer dough
recommendations for the banks after royal commission known to have exposed the large
number of scandals which includes billing death of the financial advice(Knaus, 2019). The
commissioner have also stated that the financial institutions and banks should be working on
the ethical basis. The banks therefore are need to be strong and profitable in nature, robust
and above all should be ethical in nature. The Business Council of Australia known to have
welcomed the recommendations as “common sense but are also far reaching” in
nature(Remeikis 2019). On the other hand, the Australian Banking Association have
responded in the similar months. The chief executive of Australian Banking Association have
admitted that the sector have failed the consumers but have pledged to do better(Remeikis
2019).). The royal commissioner, Hayne, have used the report for attacking the financial
regulations of Australia (Remeikis2019).
The government should also eliminate the default interest on loans in those areas
which are generally impacted by the natural disasters. The article also states that a
compensation scheme will be available which the banks will fund. The report also points out
that the conlicted remuneration practices should be stopped.A new oversight body should be
establishing to scrutinise their effectiveness and therefore will be reporting to the minister
biennially. The recommendations of Hayne’s would give then enough power and also
provide more incentive for taking the banks to court. Both Asic and Australian Prudential
Regulation Authority known to have welcomed the recommendations and have also stated
that they would set about considering the best ways for implementing the changes. Hayne
have stated about more than 20 cases of misconduct which are also referred to the financial
regulators and also considers it to be the criminal action (Remeikis 2019).The royal
commissioner have also known to recommend significant number of changes for preventing
the banks for changing the fess for no service. After that banks will be able to take into

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account the consumer needs in the remote areas. The report also stated that remuneration for
the banks would be rebuilt and therefore the APRA regulated institutions will therefore
should be changing their bonus. It will also follow such remuneration structures which will
encourage sound management of the non financial risks. The remit of the Australian
Financial Complaints Authority would also expand for allowing it to compensate the victims
of misconduct for around 10 years (Knaus 2019). The providers of financial advice would be
compelled for reporting serious compliance concerns. Both the agencies Asic and Apra
should be coordinating and also share he information more effectively. The government
should also eliminate the default interest on loans in those areas which are generally impacted
by the natural disasters. The article also stated that there will be presence of a compensation
scheme of the last resort that is being funded by the banks. The report also points out that
there should be an end to the practices such as conflicted remuneration. A new oversight
body should be establishing to scrutinise their effectiveness and therefore will be reporting to
the minister biennially. Asic and Apra both are known to be subjected to reviews of
quadrennial capability.
Hayne have expected to deliver tough recommendations after the royal commission
have exposed the large number of scandals which includes billing death of the financial
advice(Remeikis 2019). The commissioner have also stated that the financial institutions and
banks should be working on the ethical basis(O'brien 2019). The banks therefore are need to
be strong and profitable in nature, robust and above all should be ethical in nature. The
misconduct will be deterred only when the entities believe that the misconduct have been
detected and denounced. The royal commissioner , Hayne, have used the report for attacking
the financial regulations of Australia. The recommendations of Hayne’s would give then
enough power and also provide more incentive for taking the banks to court. Both Asic and
Australian Prudential Regulation Authority known to have welcomed the recommendations

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and have also stated that they would set about considering the best ways for implementing the
changes(Knaus 2019).
Conclusion
The royal commission is known to provide recommendations to the banks of what
they should do since some of the banks will be facing criminal prosecution for chaging fees
for no services. . Both Apra and Asic have welcomed the recommendations that the bank
should follow. . The government should also eliminate the default interest on loans in those
areas which are generally impacted by the natural disasters.

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Reference list
ABC News. (2019). Banking royal commission report at a glance. [online] Available at:
https://www.abc.net.au/news/2019-02-04/banking-royal-commission-report-at-a-glance/
10777188 [Accessed 2 May 2019].
Knaus, C. (2019). Banks may face criminal charges after final royal commission report.
[online] the Guardian. Available at:
https://www.theguardian.com/australia-news/2019/feb/04/banks-may-face-criminal-charges-
after-final-royal-commission-report [Accessed 30 Apr. 2019].
O'brien, J., 2019. Resilience as the organising framework for reform: the dangers of
metaphors in financial regulation. Law and Financial Markets Review, 13(1), pp.3-16.
Remeikis, A. (2019). Key points and recommendations of the banking royal commission
report. [online] the Guardian. Available at:
https://www.theguardian.com/australia-news/2019/feb/04/key-points-and-recommendations-
of-the-banking-royal-commission-report [Accessed 30 Apr. 2019].

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