As reported by the Australian Financial Review, John Lonsdale, Chair of the Australian Prudential Regulation Authority, has said that improving risk culture and remuneration practices in Australia's financial sector remains a "work in progress."
This month marks five years since Kenneth Hayne issued the final report of the landmark Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry. The report made 76 recommendations for how regulators, legislators, and firms could get a handle on unmitigated misconduct risks. "There's been some important changes since Hayne, and with some of it you can see the effects," Lonsdale said. "But there's a pool of it, I think, that is yet to play through: and we're watching."
As such, APRA intends to step up its supervision of governance and culture matters in 2024. This includes a heightened focus on remuneration and banks' use of profit-based performance incentives.
According to Anna Bligh, CEO of the Australian Banking Association, the job of improving culture in the financial sector is never complete. "Sunlight is the best disinfectant during times of crisis and change," Bligh said. "The excoriating experience of the royal commission is etched deeply in the minds of people in the banking sector."
For more on these themes, don't miss Anna Bligh's contribution to Starling Insights' 2024 Compendium, coming later this Spring.