Reflections paper on Taking action on Banking, Superannuation & Financial Services Royal Commission passing legislation

 In the financial and banking industry, consumers can face a lot of issues, and they can be trapped into so many things. The situation can get worst for them if they are also not protected by the law. The banks and financial institutions always come up with regulations, which are not favourable for consumers; rather those regulations are more protective for them. The misconduct in the financial and banking industry can cause a lot of financial and other damages to the consumers and they must be protected in the best possible manner. In this article, the discussion is made on the new legislation passed by the Morrison Government in Australia so that any legal actions can be taken against banks. A new bill has been passed by the government with the help of parliament. This bill was passed to make sure that small businesses along with consumers are protected against banking frauds and misconducts. This bill has also been passed to come up with a strong role, which is generally played by the financial regulators. The Financial Sector Reform Bill 2019 was passed to ensure that consumers, as well as, small businesses can feel more protected. Large organisations have the ability and capacity to deal with such issues, but it is hard for small businesses and individual consumers to do so. The Hayne Royal Commission came up with four considerable recommendations for this Bill, and each recommendation has its own importance (Mirage News, 2020)

            It is vital to understand for the consumers, banks, small businesses, as well as, many other financial institutions that business ethics is an important thing for them to consider. To define business ethics in simple terms, it is said that “the process of evaluating decisions, either before or after, with respect to the moral standards of society.” There are various major ethical values, which should be practiced by banks and other institutions and some of the values are accountability, responsible citizenship, fairness, integrity, as well as, honesty. In more simple words, when the right is chosen over the wrong and good is chosen over the bad; it means that business ethics have been adopted. When there is a situation for a bank that they can have an option to go with the truth, or they can lie, but they chose to remain with truth, it means that they valued business ethics. There could be situations where organisations can choose between fair and unfair elements, but when they chose the option of being fair, it shows their integrity as an ethical organisation, which strongly believes in business ethics. The daily business activities can come up with various ethical decisions to make, and it is the responsibility of the organisations to make those ethical decisions by following the essence of moral and ethical values. The organisations going with ethical decisions are always respected and trusted by the consumers, and they tend to get more response from the consumers, as compared to those, who fail to show the essence of business ethics (Menezes, 2016)

            It is a fact that the law takes its course to force business firms and financial institutions to follow the legal, ethical, and moral guidelines. In most cases, the ethical elements are left on the choice of an organisation. But there are situations, where the damage of not following business ethics for consumers or society is bigger in its impact. So, for such kind of cases, the laws are passed to restrict organisations to avoid those unethical misconducts. This was the purpose of the law passed by the Morrison Government. It has been observed that when banks are involved in a variety of tasks, and when they are involved in unfair means, then they can be held responsible for their wrong conduct. The law has been passed by the government to protect the consumers in case of violating any laws such as unfair contract terms, mortgage intermediaries, mortgage brokers, funeral benefits, funeral expenses facilities, as well as, insurance contracts. All of these laws are well explained in the legislation, and each and every section is well written to protect the rights of consumers. If these legislations are not there, then banks and other financial institutions can exploit consumers in so many ways. The law has also included various important recommendations, which are making it more useful for consumers. As per the Royal Commission’s final report, the government has made sure that all 76 primary recommendations are included and due course of action is taken if any part of the law is violated (Legislation.gov.au, 2020)

            Keeping the legislation explained in this article, it is vital for banks and other financial institutions to realize that they can be more trustworthy for consumers if they follow business ethics with its true sense. There was a time when banks had a good reputation amongst consumers, but this image has been deteriorated in so many ways. The banks should understand the fact that their role for society is critical, and if they can win the trust of the public at large, then both can work together to grow society and economies. It is an important but complex question for banks to answer, like how they can recover their bad image amongst consumers. It will not be an easy journey for them, but it is still achievable. The recommendations made in the legislation of the Australian Government can be a good source for banks to recover their image. Moreover, it is also recommended to them to recover their overall social role, which they can play more positively. They should invest in wealth to make better progress in societies. It is true that law restricts them to show the essence of transparency, but there are various other things related to transparency, which may not be covered by the law, but still, they can show the level of transparency to become more socially responsible. The employees should not be pressurised for more sales as they will manipulate facts in front of consumers, just to grab a sales deal with them. So, banks should always encourage and support all fair means to conduct banking business, rather being on the wrong side of things (Forbes, 2014)

            After reviewing the article along with various other elements, it can be said that banks should always show ethical, legal, and moral responsibilities so that they can regain their trust from the consumers. The Morrison Government has taken a vital step in this regard by passing the legislation; as such kind of legislation is critical to put banks on the right track. If banks can work on these recommendations, and they remain as fair as possible to their consumers, then they can get a more aggressive response from the consumers. It is good that financial institutions such as banks are regulated in every aspect of their business, and these regulations are more in numbers as compared to any other sectors. The law passed by the government is an indication of the fact that the banking sector of Australia will be managed more properly, and consumers can certainly feel more protected (Koslowski, 2011)

References of on Taking action on Banking, Superannuation & Financial Services Royal Commission passing legislation

Forbes (2014) 10 Ways "Banking Sector Ethics" Can Stop Being An Oxymoron, [Online], Available: https://www.forbes.com/sites/iese/2014/12/22/10-ways-banking-sector-ethics-can-stop-being-an-oxymoron/#5d0544e560fc [26 April 2020].

Koslowski, (2011) The Ethics of Banking: Conclusions from the Financial Crisis, illustrated edition, Springer Science & Business Media.

Legislation.gov.au (2020) Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020, [Online], Available: https://www.legislation.gov.au/Details/C2020A00002 [25 April 2020].

Menezes, A. (2016) 'BUSINESS ETHICS AND ITS IMPORTANCE IN BANKING INDUSTRY', International Journal of Scientific Research and Modern Education (IJSRME), vol. I, no. II.

Mirage News (2020) Taking action on Banking, Superannuation & Financial Services Royal Commission – passing legislation, [Online], Available: https://www.miragenews.com/taking-action-on-banking-superannuation-financial-services-royal-commission-passing-legislation/ [25 April 2020].