With the FSC ‘s annual premier conference event – The Summit – less than 2 weeks away, The FSC sat down with Julie Coates, PwC Managing Partner, Clients & Markets and Financial Services Industry Leader to get an insight into what to expect during her panel discussion on Tuesday, 27 August.
By Ben McAlary
At last year’s The Summit the then Federal Minister for Financial Services Kelly O’Dwyer called 2018 the most important year for the financial services industry. In your mind did it live up to this statement?
With the backdrop of the Financial Services Royal Commission, APRA industry self-assessments and the Productivity Commission review into Australia’s financial system, 2018 certainly lived up to a year of great exposure for Australia’s financial services system. Thanks to robust media coverage coupled with increased general public attention, 2018 will be remembered as a really important year for the industry as it had to face hard challenges under the spotlight.
And the challenges were considerable. A heavy focus was, and rightly so, put on driving the right customer outcomes, the time being spent on remediation and the lack of diligence in dealing with breaches.
In 2018 we were challenged, this year is all about how we respond.
How will 2019 be different?
This year presents an opportunity for the financial services industry to get on the front foot to be more customer centric, to focus on delivering the right customer outcomes and most importantly complying with the law. We’ve spent a good deal of time getting a grip on these issues and working out what needs to be done. It’s now really about action. I would like to see 2019 as the year the industry starts to deliver tangible change on these issues, which will also help rebuild trust in the sector.
The Australian financial services portfolio has been described as ‘battered and bruised’ by the opposition. What are the areas the Morrison Government needs to prioritise to get the portfolio back on track?
With the Morrison Government set on introducing legislation by the end of the year, it is paramount that open and honest dialogue is had between industry, government and the regulator in order to focus on customer outcomes.
A big part will be on how industry communicates to the government about the actions it has already taken since the handing down of the Royal Commission findings. Rather than introduce new legislation, the primary findings of the Royal Commission found that industry needs to comply with existing laws and regulations. Therefore, the onus is not on the Morrison Government but on us as an industry. We need to show that we are complying as we can’t afford to slow down the economy, which will impact the products and services that customers need.
There also needs to be careful dialogue between government and regulators around what the industry has already done and continues to do. Sensible balanced debate needs to be had to what remains and needs to be legislated, as opposed to regulatory intervention that has the potential to further slow-down the economy.
At the end of the day any increased regulation will need to be balanced to ensure the system, as a whole, is providing customers with better outcomes.
Having worked in the UK what can Australia learn from the UK’s financial services reform experience?
The UK experience is a lot different to the Australian experience, yet there can always be lessons to learn. Essentially, reform in the UK was a result of the global financial crisis that caused a number of banks to collapse and subsequently become government owned. This resulted in a whole set of different behaviours from government, regulators and the industry which put the whole financial services system under an enormous amount of stress.
As a result, some of the changes in the UK system haven’t been made with the best customer outcomes in mind. A good example was Payment Protection Insurance products which resulted in a lot of money getting into the hands of lawyers and claims management consultants as opposed to putting customers in better financial positions through tailored and fit-for-service products and services. There was also financial services companies exiting the market at a time when customers needed them the most.
While we are operating with a different backdrop, we need to be careful in Australia that this doesn’t become a similar consequence. Our remit should be focused on putting customers first by providing more access to advice to more Australians, not driving companies out of delivering this service.
We need to make sure that any reform is balanced between being affordable, accessible and focused on quality while ensuring that all stakeholders are complying in the right way.
What are you most looking forward to in your discussion with Paul Bloxham, Graham Hand and Bryce Doherty?
There are a couple of key observations from the panellists that I’m looking forward to hearing.
The first is around global insights. I am interested to hear what is happening on a global perspective within their businesses and whether they can share their own reflections about how they see Australia placed within that global landscape.
Secondly, I am curious to find out the mood inside their organisations. It has been a year since the Royal Commission, what has been implemented? Is there more to be done or do they feel that they have broken the back in terms of the Royal Commission’s recommendations? Similarly, how have things changed from a culture perspective? Have remuneration models changed and if so, how?
Lastly, I will be asking the panel about customer behaviour. How have they tracked customer behaviour since the Royal Commission? Have more customers left? Have customers been more demanding? Has the level of complaints increased?
I am really looking forward to exploring these questions and more with Paul, Graham and Bryce on 27 August.
What is the one thing you hope delegates walk away from your session thinking?
Essentially, I would really like to see delegates respond to the call to rebuild trust in the industry. Regardless of the response to the upcoming legislation, my hope is that as an industry we can own the agenda together in order to shape our business practices of the future for the benefit of all Australians.