MAF202: Money and Capital Market Royal Commission Analysis

This report examines the significance of the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Service Industry. It details various scandals in the banking and financial services sectors, including the Wells Fargo fake account scandal, money laundering, and Australian bank fee scandals. The report discusses the role of regulatory bodies like APRA and ASIC in maintaining transparency and addressing misconduct. It also analyzes the commission's recommendations on consumer lending practices and financial planning, highlighting the impact of these measures on the financial services industry and the economy. The report emphasizes the importance of stringent regulations, transparency, and effective management to prevent future scandals and ensure the stability of the financial system. The report also reflects on the student's understanding of the topic and the implications of the commission on the financial institutions.

Running head: MONEY AND CAPITAL MARKET
Money and Capital Market
Name of the student:
Name of the university:
Author Note:

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Executive Summary
This paper conducts the significance of the royal commission in the banking and the financial
service providing institution. The various scandals associated with the baking and the
financial service in the history of banking and government initiative in such cases have also
been disclosed in a detailed manner.

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Table of Contents
Introduction:...............................................................................................................................3
Discussion:.................................................................................................................................4
Task 1.....................................................................................................................................4
Task 2.....................................................................................................................................5
Task 3.....................................................................................................................................7
Conclusion..................................................................................................................................9

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Reflection:
The aim of my assignment deals with the royal commission and I have depicted
implication of the royal commission in the regulation and the maintenance of the misconduct
of the banks and the financial service providing institutions. My conducted study is based on
the different types of the fraudulent activities which happens in the financial institution. In
order to get rid of the fraudulent or the scandals which took place in the history of banking
institution have been discussed in detailed manner. My work is focused on the significance of
the transparency in the financial service providing institution have also been shown in the
conducted study and the role played by the APRA and the ASIC have also been discussed in
the study.

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Discussion:
Task 1
The Royal Commission into the Misconduct in the banking, Superannuation and the
financial service industry which is also known as the Hayne royal commission was
established in order to prepare report on the misconduct in the banking industry (Telfer
2017). The commission is established which is further followed by the declaration in the
media of a culture filled with greed within the several Australian financial institution. In this
case there was a declaration that the financial institution were involved in some of the illegal
activities such as the money laundering of drugs, terrorism in financing and the statutory
reporting responsibility and fraud in case of the foreign exchange trading (Admati 2018).
There is various kind of misconduct in the banking systems like the money laundering,
charging different fees from the clients and sometime charging fees for not providing any
kind of services to the clients in case of the wealth management and the financial
management of the company. The royal commission provides reports where the rules and
regulations are written in a detailed process. The financial service industry must take care of
the issues related to the scandals in the financial system of the organizations of the company.
The royal commission generated reports regarding the various kind of the greedy situations
associated with the fraudulent activities of the banking systems. According to my concern,
illegal activities of the bank must be demolished in order to bring in transparency in the
system of the financial institution and various policies are generated in that case to avoid such
kind of the misconduct or the scandals associated with the banking systems of the
organizations. If the management system of the company is effective then then the customers
will be reliable to make further investments in the banking systems of the company.

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The three scandals as per my study in the banking and the financial services are the
Wells Fargo fake account scandal, money laundering and Australian bank fee scandal. Wells
Fargo fake account scandal is quite a renowned scandal which happens in the process where
the customers creates accounts in the bank and later they don’t contact with the bank and
takes huge loan and flee away (Thompson 2016). Hence this bank in this case has nothing to
do about such scandal. The bank have to take stringent measure in this case in order to
manage and stop such scandal. The loans sanctioned by the banking institutions results in the
increase in the Non-performing assets of the bank which may put the bank in trouble to
manage such deficits in the near future by the adjustments otherwise the bank may face the
chance of getting liquidated at the end of the year. Money laundering is also quite renowned
fraud where the bankers may launder money from the bank in such a way that it goes
unnoticed in the record of the banks which is a fraudulent activities in this case. This kind of
fraud falls under the ethics of the rules and regulations of the bank and bank have to
undertake a policy to remove such kind of fraudulent activities (Williams and Conley 2015).
Australian bank fee scandal is about the improper way of collecting fees for proving services
and charging high service fees from the clients for the purpose of giving financial related
advices to the clients is an illegal; or fraudulent activity of the banking and the financial
service industry. Hence, accurate fees as per the norms of the banking institution must be
charged in that case in order to avoid any kind of the misconduct or scandals while charging
fees from the clients. I believe that banking systems must take care of the glitches related to
the issues of the banking systems and for that the financial institution must also take
measures of the accounting systems. As per my concern, methodology of the systems must be
revised in order to bring depth in the transparency in the systems of the company. Small
issues or the scandals can lead to huge deficits or loss in the long run objectives of the
banking or the financial service providing companies.

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The productivity commission is refer to as the Australian Government independent
research and advisory based on the social, economic and environmental issues which affects
the social welfare of the Australians (Chittoor, Kale and Puranam 2015). I believe that, this
helps the government to make better policies in the long term interest of the Australian
community. The environmental issues must be taken care of by the government in order to
bring sustainability in the system which will enhance the productivity. In such a case, I think
that illegal or the frauds in that case will be less compared to the previous actions held.
Independent research in this area is further mandatory in order to improve the social related
activity (James 2015). Stringent measures undertaken by the productivity commission in
order to bring competitiveness in this sectors. Implementation of better policies by the
government will further help to achieve or accomplish the objectives set by the government
in the productivity commission in the Australian community and further will help the
government the compete with its competitors in the long run.
Task 2
I believe that implication of the Royal Commission is a boon for the financial services
industry to the consumers and the economy as a whole. As per my concern, this act would
further remove the fraudulent activities in the banking and the financial service industries
(Chittoor, Kale and Puranam 2015). Any kind of the fraudulent activities related to the
money laundering, banking scams and many more miscount in the banking and the financial
industry. I believe that this will remove the casualties in the banking and the financial service
sectors and the company can get rid of all kinds of the losses due to the uncertainty factors.
There are many fraudulent activities in the management system of the
I think that applying stringent policy to stop the loss of money of the bank and the
financial service sectors, where Royal Commission has not made it difficult to obtain loans
but on the other hand made possible to reduce the fraudulent activities (Dupas et al. 2018).

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Providing loans to the customers without keeping any detailed records of the customers will
automatically hamper the financial institution or the banking system in the near future where
the NPA or the Non-performing assets of the company will automatically increase if the loan
fund is not recovered in that case. Hence, the Royal commission will help the banking and the
financial institution to get rid of such fraudulent activities in that case (Kennedy 2015).
The payment received by the financial service providers of the banking and the
financial institutions mainly comes from the service provided to clients in case handling their
books of accounts and dealing with the portfolio of the clients and for that the financial
provider charge huge amount from the clients (Douglas et al. 2017). Further I believe that
royal commission act will stop the fraudulent activities conducted by the financial services
providers in charging wrong or undesired amount by breaking the rules and regulation of the
institution. This will further bring transparency in the banking system as well as the service
providers will be further alert about the misconduct and the rules and regulation settled by the
department of law. Hence the service providers will be abide by the rules and will strictly
follow the rules in that case. I believe that norms will help the client to get the maximum
exposure out of such wealth management where they can simply rely on the services
provided by the financial institutions in that case.
The role of ASIC or further known as the Australian Securities and Investment
Commissions is the financial market regulators of Australia (Markham 2015). The ASIC
ensures the transparency and efficiency in the financial system. ASIC regulates the financial
markets or father the capital markets of Australia and it provide advices to the clients
regarding the rules and regulations of the investments, superannuation, deposit taking, credit
and insurance (McCarthy and McCarthy 2018). The role of APRA which is further known as
the Australian Prudential Regulation Authority is the prudential regulator of the financial
system of the institution. The responsibility of this system is based on the prudent

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management of the regulated institution so that the management can reach the financial
obligations under all the reasonable circumstances. APRA manages the banks, credit building
society, life insurance and many more. If there is any new kind of fraudulent activities in the
market then there can be chance that the APRA and ASIC may change the norms or can add
new features in the systems or the norms of the business. Hence as per my study, this remove
the uncertainty in the financial systems and the regulation in the market and all sort of
scandals. The regulatory systems in the APRA and the ASIC must be stringent and any kind
of flaws must be neglected in that case which will bring transparency in the financial
regulatory system of the company. Hence I believe that the transparency in the system is
mandatory in case of the regulatory system which must be taken care of otherwise there will
chances of the commitment of the scandals or the fraudulent activities in the business.
Task 3
The two recommendations made by the Royal commission is the consumer lending
practices and financial planning and wealth management (Cranston 2018). Helping the
customers by providing loans by making stringent rules and regulation by the royal
commission will automatically remove the misconduct in the banking and the financial
institutions. As the royal commission head that it is becoming difficult for the financial
institution to verify the loans provided to the customers as the mortgage brokers and for that
the royal commission provided the policy which must be accepted by the government in order
to pass the resolution for handling such kind of difficult lending practices. There also lies the
chances of the fraud while banks or the financial institutions deals with the loans and the
credits. The royal commission provides the reports related to such kind of misconduct in the
superannuation’s or the break of rules in the banking and the financial institutions (Véron and
Wolff 2016). The scandals related to the sanctions of the huge loans in this financial industry
will be taken care of as the loans will be sanctioned by abiding the rules in order to bring

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transparency and accuracy in the system. In this case rules must be strictly followed by the
authorities of the financial planner and the banking institution. The banks have to take lots of
initiatives for delivering the best to the clients which they always expects from the bank.
Managing the financial position with transparency and by not breaking the ethics associated
with it and clients feedback regarding the service provide must be taken into consideration in
that case. Scandals can lead to the demotivating for further investments in the banks and the
financial institutions on the perspective of the clients which must be taken care of by passing
the hearings of the royal commission reports.
I believe that the financial planning and the wealth management of the organization
the government need to pass the bills or the hearing, related to charging different fees for
providing various types of the financial and the wealth management services. The act
ensures that if services are not provided to the clients then further financial service charges
will not be deducted from the clients account. Previously there was money laundering
techniques in case of providing service to the clients where the financial service providers
hacked lots of amount from the clients account by breaking the ethics of the organization
along with that the significant norms followed by the organizations (Smallbone 2017). If the
government passes the royal commission act then it will automatically bring the transparency
in the financial system and also in case of the financial services provided by the company for
managing the clients wealth is further known as the wealth management and financial
management of the client’s books of accounts.

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Conclusion
From the above discussion I have concluded that, the royal commission act plays
significant role in removing or rather decreasing any kind of fraudulent activities in the
business (Molyneux 2016). Further I believe that rules and the regulation passed by the royal
commission will help the banking system to bring in the transparency, accuracy and
efficiency in the service providing activities of the company (Owens 2015). Banking frauds
are the scandals which happens and accordingly the act or the new norms which must be
undertaken by the royal commission and the bills passed in the hearing must be taken into
consideration by the government in order to make the whole system accurate and effective.
The fraudulent activity will automatically increase the NPA of the banking and the financial
institution which will further lead the banks to dissolution in that case (Schenk 2016). Hence
as per the conducted study I believe that the bringing in transparency in the financial system
of the bank and the financial service providing institution.

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References
Admati, A., 2018. Financial crises, corporate scandals and blind spots: who is
responsible?. LSE Business Review.
Chittoor, R., Kale, P. and Puranam, P., 2015. Business groups in developing capital markets:
Towards a complementarity perspective. Strategic Management Journal, 36(9), pp.1277-
1296.
Cornaggia, J., Mao, Y., Tian, X. and Wolfe, B., 2015. Does banking competition affect
innovation?. Journal of financial economics, 115(1), pp.189-209.
Cranston, R., 2018. Principles of banking law. Oxford University Press.
Douglas, C.B., Scott, W., Tapley, R., Handasyde Duncan, H., Cooper, C., Hanson, R.,
Waterhouse, G., Torrens, R., Henry, J., Wyatt, W. and Mayo, G., 2017. History of royal
commissions in SA. Monday 6 March 2017, 6pm to 8pm, p.36.
Dupas, P., Karlan, D., Robinson, J. and Ubfal, D., 2018. Banking the Unbanked? Evidence
from three countries. American Economic Journal: Applied Economics, 10(2), pp.257-97.
James, J.A., 2015. Money and capital markets in postbellum America (Vol. 1436). Princeton
University Press.
Kennedy, S.E., 2015. The banking crisis of 1933. University Press of Kentucky.
Markham, J.W., 2015. A financial history of modern US corporate scandals: From Enron to
reform. Routledge.