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It may not have been Goebbels who uttered the infamous phrase “When I hear the word culture, I reach for my gun”, but the phrase springs to mind in considering the (very rapid) appointment of former Commonwealth Bank head, Future Fund chairman and financial services inquiry head David Murray to the recently vacated AMP chair. While Murray’s appointment to the Brenner Pass has been welcomed, it’s worth reflecting on what no journalist over the weekend except Fairfax’s Elizabeth Knight noted about Murray’s view of regulating culture.
ASIC is pursuing this notion that you can have liability for a culture breach. It is absolutely impossible to legislate for that. In fact you could argue that it’s anti-competitive, because you can’t have the same culture for everyone by definition — a great culture is competitive advantage. It’s anti-competitive. It’s inefficient. And to be perfectly candid again, there have been people in the world who’ve tried to enforce culture. Adolf Hitler comes to mind.
This was Murray’s view just over two years ago. As the royal commission has confirmed for us recently, any comparison of ASIC with an enthusiastic boy scout troop, let alone the Nazis, is the stuff of fantasy. But it reflects how profoundly out-of-touch Murray can be, because it’s apparent that the financial services sector’s problems are profoundly cultural.
Before the government was forced to allow a royal commission, the Australian Prudential Regulation Authority (APRA) and the Reserve Bank as well as ASIC repeatedly outlined their concerns about bank culture. Last week’s APRA review of the Commonwealth Bank was all about the bank’s culture, the failings within it and how the board failed to address them. AMP has already admitted it needs to overhaul its culture. But Murray appears to think culture should be completely outside the purview of regulation — that is, entirely self-regulatory. Because Nazis, or something.
Murray, of course, is well know for having controversial opinions. He thinks the Rudd government should have done exactly nothing in response to the financial crisis except guarantee bank deposits. He is a notorious climate denialist.
But it’s in relation to financial regulation that his views are particularly problematic. A year ago, Murray opined that a royal commission was “not only unnecessary, it sets up higher systemic risk because the outside world doesn’t see the need for one”.
Murray thought the banks were too heavily regulated. “It’s a real problem when you’ve got ASIC bashing the banks on a weekly basis … there’s the cost of anti-money laundering compliance and other regulation, and they’re now funding ASIC as well as APRA. It really is too much.”
Murray’s comments on money-laundering came before the exposure of the CBA’s problems. Perhaps he has changed his view on money-laundering regulation. And perhaps, given the royal commission has gifted him a major chairmanship, he’s changed his mind on that too. Or perhaps he’s still seeing swastikas wherever he looks.
“Anti-competitive”? When the evidence points to the fact that the “competition” was to the moral bottom, in a race to strip customers of what was theirs?
Murray is typical of the sort who has to be touched by something before they’ll grant it’s existance.
We don’t want the fool to regulate culture, we want him to enforce the law. AMP is not guilty of bad culture, malpractice and theft.
A great but unsettling collection of quotes.
The Australian financial services sector’s problems are twofold.
First, they are oligopolistic and anticompetitive. That has happened by too many mergers, too many bank failures and poor government decisions to permit and encourage “four pillars”.
One result is patent bank collusion on the setting of major interest rates, the design and pricing of products and the gouging of customers. Turnbull has publicly criticised the banks for these practices.
Second, the banks, which enjoy precious public financial assistance in the form of RBA’s Lender of Last Resort Role, have diversified (“vertically integrated”) into other financial industries. The Big Four Aussies have combined market caps greater than all the banks of Europe combined. Do you think that happened because they are better bankers? No, they sponged off the Government deposit guarantee. Make no mistake, that guarantee was sought and provided in 2008 to head off a run on bank deposits. It was provided initially for FREE ! Yes, the government used taxpayer money to directly subsidise bank shareholders. But the banks have undertaken diverse business risks, all underwritten and facilitated by the public’s guarantee. The banks pump up the world’s biggest housing bubble by selling high-risk loans subsidised by the public’s guarantee.
The business practices of the Australian financial services sector are now characterised by price gouging. That has occurred because the oligopoly does not value customers (they have nowhere to run). Fee income has been stacked on top of traditional prices (just like all our many other oligopolies from airlines to supermarkets to communications). That is how business is done in Australia. That is business culture and it is clearly unproductive and inefficient.
Can culture be regulated? I don’t care to debate semantics with David Murray.
Oligopolies can be regulated. Anti-competitive practices can be regulated. Collusion can be regulated. Uncommercial subsidies can be regulated. Divestment of vertical integration can be regulated. The regulators have long had sufficient power to investigate and report and they have failed us.
Why? Because banks have too much influence over political parties.
The CBA letter to customers claims twenty million lost customer account statements is not “compromised” data privacy. It defends its failure to disclose the loss because it did not want to “unduly alarm” customers. It speaks as though it would be realistic to take the same decisions tomorrow. Is that a cultural failure? It is, by any definition of culture that I recognise. Customers are duly alarmed. Can it be regulated? It would have been, long ago, if Truffles had not distracted himself with dual citizenship threats to his parliamentary numbers and credibility.
It wasn’t Goebbels, it was Goering, the art thief, who said that he reached for his gun when he heard the word ‘culture’.
No, it’s actually a quotation from a play.;
http://oupacademic.tumblr.com/post/75094913460/misquotation-hanns-johst