The 2019 report of the Australian Royal Commission on Banking lifted the veil on the appalling behavior of some of the country’s most important financial institutions. The report investigated an impressive litany of misconduct, which included bribery, forged documents, failure to verify the customers' living expenses before granting them loans, as well as selling insurance to people who could not afford it.
Hundreds of thousands of Australian affected by the banking scandal
First to come under scrutiny were four of Australia’s largest banking institutions, – Commonwealth Bank, Westpac, ANZ, National Australia Bank, but soon enough it became clear that other financial institutions involved in real estate or car financing services engaged in similar fraudulent practices. The large scale misconduct on the part of the country’s leading financial institutions deeply impacted the lives of hundreds of thousands of Australian citizens, some of whom were reduced to poverty as a result.
The huge scandal showcased the need for financial institutions to drastically alter their practices, as well as the need for employees in the banking sector to be properly vetted before hiring. The banking royal commission report can be found here: Report.
Who’s responsible - the system or the people?
When you look at the findings of the Royal Commission one thing is clear - none of this could have happened without the direct involvement of the management of each bank. The fraudulent practices were obviously ordered and approved by the banks’ board of directors. Yet, this does not exonerate the employees, those working directly with the customers in the local branches of the banks all over the country. Every employee is just as guilty as the members of the board. They definitely had orders to push expensive services and loans on people who could not afford them and they did not care. After all, the bank employee was there face to face with the customer and he knew that the moment the poor guy signs the papers he will be condemned to growing debt and possibly bankruptcy.
The need for strict background checks
What sort of man does this to another? One who feared for his or her job, obviously, since we’re talking about corporate policy on the part of the financial institutions. On the other hand, it is reasonable to assume the many of the employees who knew how the system worked found ways to profit as well. Since we’re on the subject, let’s not forget that there have been cases where bank employees have forged documents to steal from the customers’ accounts.
In light of this immense scandal there’s no doubt banks must change their practices as well as their hiring strategies. Job applicants need to be carefully scrutinized, their credentials and references thoroughly checked and they need to undergo background checks. There is no excuse for skipping credit history or police checks nowadays. Criminal history checks can nowadays be obtained online through services like the australian national character check - police checks online australia. Credit history checks can be obtained through services like Equifax. Financial institutions need to ensure that they are hiring people with the right credentials, and need to think past profit. A sound starting point is making sure the people in the sales force are of sound character (e.g. no criminal history or bad credit history), and they don’t have a financial commission for each sale which presseurises them to sell, even if it is not in the customers’ best interest.
Most Australians have already lost faith in the country’s financial institutions and the only way for the banks to regain the people’s trust is to implement new and correct strategies, and make sure each employee has a clean record.
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