Resilient Financial System: Australia's Changes Since 2017 - Research Paper

Introduction

The financial system of Australia is said to be resilient and its capability to withstand shock strengthened. Various changes have taken place since Hayne Kenneth; the high court judge took over the financial system of the banks in Australia from the Australian security and investments commission (ASIC) in late 2017. Below are the issues identified to be affecting the financial institutions and their recommended change:

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Financial scandals are determined to be the significant setbacks in Australian banks, and this is brought about by weak regulations. There is excellent misconduct in the superannuation sector where exemptions and omission rules are said to affect the associates significantly. Hayne in his report, however, stated the recommended steps needed to be taken to curb this issue. He suggested the establishment of a regulatory framework and need for a stronger legislative rule which he thinks will improve the financial sector with of cause cooperation from its members. The need to come up with an Assessment Board that will issue a constant oversight of the ASIC, Australian Prudential Regulatory Authority (APRA) and other financial regulators. Which in the long run will aid in solving the issue of weak regulations by improving the culture of regulators, enhance accountability and the ability to prevent crises of finances and also prevent capture regulations. The assessment board will, however, be useful and timely to the Twin peaks which is the today financial regulatory architecture made up of ASIC and APRA.

Lack of trust is yet another issue affecting the banking sector with most banking industries identified to practice corruption. Hayne, therefore, urges the banks to perform a business model reform to regain back trust from their members. Westpac, a banking company, has thus set up a telephone service that will be used by customers from remote places and to all those that need to consult or communicate to the bank specialist. Informal overdrafts are also eliminated, and the account holders enjoy zero dishonor fees.ABA and Westpac are aiming to work hand in hand to ensure there are no problems with banking codes. When all this is implemented, trust by their members will be restored. Also to maintain their value and reduce costs for the farmers, Westpac has volunteered to give a helping hand to the agribusinesses that are facing any hardships by working directly with the farmers.

Poor governance is an issue identified to affect the financial sectors of most banks. For this reason, obligations regarding distribution and design of products have been extended to the Treasury laws amendment Act 2009 and to the Act 2001 of the ASIC who will perform an evaluation on the design, products sold to our customers, value and use our products give to our members. Any conflicts in the managerial team will be taken care of by involving the conflict management policy and also the responsible entity (RE) of the affected managed investment scheme will be replaced. Westpac has also performed various changes in its remuneration practice whereby for the individual bankers they have eliminated all specific targets for a single product and a 30% decrease in bonus scorecards for members facing employees.

Conclusion

In conclusion, Haynes report majored in the relevant recommendations of the issues needed to be taken care of by the banks for them to have a good financial report.

References

Bird, J. (2011). Regulating the regulators: Accountability of Australian regulators. Melb. UL Rev., 35, 739.s