Banking Royal Commission’s damning report: ‘Things are so bad that new laws might not help’


Peter Martin, The Conversation

Royal Commissioner Kenneth Hayne has identified “greed” as the key reason banks and other financial institutions repeatedly broke the law, along with an inability to manage, and repeated decisions by the Securities and Investments Commission and the Prudential Regulation Authority not to properly punish them.




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The three-volume interim report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, released today, concludes that Australia’s banks have built every part of their operations around selling, to maximise profits, at the expense of serving their customers’ needs.

The report says:

Selling became their focus of attention. Too often it became their sole focus of attention. Products and services multiplied. Banks searched for their “share of the customer’s wallet”. From the executive suite to the front line, staff were measured and rewarded by reference to profits and sales… How else is charging continuing advice fees to the dead to be explained?

The report reaches damning conclusions about the management systems in place at the Commonwealth Bank and the National Australia Bank, saying they were the only two organisations unable to furnish a proper list when asked about the misconduct they had been aware of over the previous five years:

Taken together, the course of events and the explanations proffered can lead only to the conclusion that neither CBA nor NAB could readily identify how, or to what extent, the entity as a whole was failing to comply with the law.

If that is right, neither the senior management nor the board of the entity could be given any single coherent picture of the nature or extent of failures of compliance; they could be given only a disjointed series of bits of information framed by reference to particular events.

It says when misconduct was revealed, it either went unpunished or hurt the perpetrators little:

The corporate regulator ASIC rarely went to court to seek public denunciation of what had been done. The prudential regulator, APRA, never went to court.

Much more often than not, when misconduct was revealed, little happened beyond apology from the entity, a drawn out remediation program and protracted negotiation with ASIC of a media release, an infringement notice, or an enforceable undertaking that acknowledged no more than that ASIC had reasonable “concerns” about the entity’s conduct.

Infringement notices imposed penalties that were immaterial for the large banks. Enforceable undertakings might require a “community benefit payment”, but the amount was far less than the penalty that ASIC could have properly asked a court to impose.

Commissioner Hayne says in the report that it may be pointless to introduce new laws designed to achieve what the existing laws did not:

The law already requires entities to “do all things necessary to ensure” that the services they are licensed to provide re provided “efficiently, honestly and fairly”. Much more often than not, the conduct now condemned was contrary to law… Passing some new law to say, again, “Do not do that” would add an extra layer of legal complexity to an already complex regulatory regime. What would that gain?

What is needed is better enforcement in order to ensure that banks and other financial institutions apply basic standards of fairness and honesty “by obeying the law, not misleading or deceiving, acting fairly, providing services that are fit for purpose, delivering services with reasonable care and skill, and, when acting for another, acting in the best interests of that other?”




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Commissioner Hayne says the basic ideas are very simple.

That means there is a case for the laws being made even simpler rather than more complex to reflect the ideas better.

Receiving the report, Treasurer Josh Frydenberg said if the regulators
enforced the laws but they had at their disposal and imposed the
penalties they had available, banks were more likely to comply with the law.

But he said whatever the criticisms of the regulator, it was important to remember who perpetrated the misconduct.

“That was the financial institutions themselves,” he said. “They are
ultimately, and the individuals involved, ultimately the ones who must
be held accountable and responsible for their actions.”




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There is nothing sacrosanct about corporate culture; we can and must regulate it


The chief executive of the Australian Bankers Association, Anna Bligh, described the report’s findings as “shocking”.

“Our banks have failed in many ways – failed customers, failed to obey
the law and failed to meet community standards. And all of these
failures are totally unacceptable,” she said.

“Too many customers have been hurt and it has to stop.”

“Australians have every right to expect the world’s best
banks. It is clear today that as an industry we have failed to deliver
that.




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Embedding regulators in banks can help change cultures of wrongdoing, despite the risks


“Make no mistake, today is a day of shame for Australia’s banks.”

“Having lost the trust of the Australian people, we must now do whatever it takes
to earn that trust back. To move from a selling culture
to a service culture, there is much more work to be done in every
bank. But every bank is determined to find the problems, to fix them
and to pay back every penny.”

The interim report released on Friday examined only the behaviour of the banking, financial advice and wealth management industries. An entire volume details case studies of misconduct.

The Commission’s final report, which will also cover the superannuation and insurance industries, is due on February 1.The Conversation

Peter Martin, Editor, Business and Economy, The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Messianic Jews in Israel Seek Public Apology for Attack


Christians await court decision on assaults on services by ultra-orthodox Jews.

ISTANBUL, April 23 (CDN) — After a final court hearing in Israel last week, a church of Messianic Jews awaits a judge’s decision that could force an ultra-orthodox Jewish  organization to publicly apologize to them for starting a riot and ransacking a baptismal service.

A ruling in favor of the Christian group would mark the first time an organization opposing Messianic Jews in Israel has had to apologize to its victims for religious persecution.

In 2006 Howard Bass, pastor of Yeshua’s Inheritance church, filed suit against Yehuda Deri, chief Sephardic rabbi in the city of Beer Sheva, and Yad L’Achim, an organization that fights against Messianic Jews, for allegedly inciting a riot at a December 2005 service that Bass was leading.

Bass has demanded either a public apology for the attack or 1.5 million shekels (US$401,040) from the rabbi and Yad L’Achim.

The case, Bass said, was ultimately about “defending the name of Yeshua [Jesus]” and making sure that Deri, the leadership of Yad L’Achim and those that support them know they have to obey the law and respect the right of people to worship.

“They are trying to get away from having any responsibility,” Bass said.

On Dec. 24, 2005, during a baptismal service in Beer Sheva, a group of about 200 men pushed their way into a small, covered structure being used to baptize two believers and tried to stop the service. Police were called to the scene but could not control the crowd.

Once inside the building, the assailants tossed patio chairs, damaged audiovisual equipment, threw a grill and other items into a baptismal pool, and then pushed Bass into the pool and broke his glasses.

“Their actions were violent actions without regard [for injury],” Bass said.

In the days before the riot, Yad L’Achim had issued notices to people about a “mass baptism” scheduled to take place at the facility in the sprawling city of 531,000 people 51 miles (83 kilometers) southwest of Jerusalem. In the days after the riot, Deri bragged about the incident on a radio talk show, including a boast that Bass had been “baptized” at the gathering.

The 2005 incident wasn’t the first time the church had to deal with a riotous attack after Yad L’Achim disseminated false information about their activities. On Nov. 28, 1998, a crowd of roughly 1,000 protestors broke up a Yeshua’s Inheritance service after the anti-Christian group spread a rumor that three busloads of kidnapped Jewish minors were being brought in for baptism. The assailants threw rocks, spit on parishioners and attempted to seize some of their children, Bass said.

In response to the 1998 attack and to what Bass described as a public, cavalier attitude about the 2005 attack, Bass and others in the Messianic community agreed that he needed to take legal action.

“What is happening here has happened to Jews throughout the centuries,” Bass said about persecution of Messianic Jews in Israel, adding that many in movements opposed to Messianic Jews in Israel are “arrogant.” He compared their attitudes to the attitudes that those in Hamas, a Palestinian group dedicated to the destruction of the State of Israel, have toward Israelis in general.

“They say, ‘Recognize us, but we will never recognize you,’” Bass said.

Long Battle

Bass has fought against the leadership of Yad L’Achim and Deri for four years through his attorneys, Marvin Kramer and Kevork Nalbandian. But throughout the process, Kramer said, the two defendants have refused to offer a genuine apology for the misinformation that led to the 2005 riot or for the riot itself.

Kramer said Bass’s legal team would offer language for an acceptable public apology, and attorneys for the defendants in turn would offer language that amounted to no real apology at all.

“We made several attempts to make a compromise, but we couldn’t do it,” Kramer said.  “What we were really looking for was a public apology, and they weren’t ready to give a public apology. If we would have gotten the public apology, we would have dropped the lawsuit at any point.”

Despite several attempts to reach Yad L’Achim officials at both their U.S. and Israeli offices, no one would comment.

The hearing on April 15 was the final chance the parties had to come to an agreement; the judge has 30 days to give a ruling. His decision will be issued by mail.

Kramer declined to speculate on what the outcome of the case will be, but he said he had “proved what we needed to prove to be successful.”

Belief in Israel

Bass said he is a strong supporter of Israel but is critical of the way Messianic Jews are treated in the country.

“Israel opposes the gospel, and these events show this to be true,” he said. Referring to Israel, Bass paraphrased Stephen, one of Christianity’s early martyrs, “‘You always resist the Spirit of God.’ What Stephen said was true.”

Kramer said that the lawsuit is not against the State of Israel or the Jewish people, but rather for freedom of religion.

“It has to do with a violation of rights of individuals to worship in accordance with the basic tenants of their faith and to practice their faith in accordance with their beliefs in accordance with law,” he said.

Terrorist Organization?

Bass’ lawsuit is just one of many legal troubles Yad L’Achim is facing. In February, the Jerusalem Institute of Justice (JIJ), a civil rights advocacy group, filed a petition asking Attorney General Yehuda Weinstein to declare Yad L’Achim a terrorist organization and order that it be dismantled.

In the 24-page document Caleb Myers, an attorney for JIJ, outlined numerous incidences in which Yad L’Achim or those linked with it had “incited hatred, racism, violence and terror.” The document cited instances of persecution against Christians, as well as kidnappings of Jewish women from their Arab partners.

“Israel is a ‘Jewish and democratic’ state, while the actions of Yad L’Achim are not consistent with either the noble values of Judaism or the values of democracy,” the petition read. “Not to mention the fact that it is a country that arose on the ashes of a people that was persecuted for its religion, and has resolved since its establishment to bear the standard of full equality, without discrimination on the basis of gender, race, religion or nationality.”

According to the document, Yad L’Achim went after people it viewed as enemies of ultra-orthodox Judaism. The group particularly targeted Messianic Jews and other Christians.

“Yad L’Achim refers to ‘missionary activity’ as if it was the worst of criminal offenses and often arouses fear of this activity,” the document read. “It should be noted that in the State of Israel there is no prohibition against ‘missionary activity’ as the dissemination of religion and/or faith among members of other religions/faiths, unless such activity solicits religious conversion, as stated in various sections of the Penal Code, which bans the solicitation of religious conversion among minors, or among adults by offering bribes. Furthermore, the organization often presents anyone belonging to the Christian religion, in all its forms, as a ‘missionary,’ even if he does not work to spread his religion.”

Particularly damning in the document was reported testimony gleaned from Jack Teitel. Teitel, accused of planting a bomb on March 20, 2008 that almost killed the teenage son of a Messianic Jewish pastor, told authorities that he worked with Yad L’Achim.

“He was asked to talk about his activity in Yad L’Achim and related that for some five years he was active in the organization, and on average he helped to rescue about five women each year,” the document read, using the Yad L’Achim term “rescue” to refer to kidnapping.

The 2008 bombing severely injured Ami Ortiz, then 15, but after 20 months he had largely recovered.

Teitel, who said Ortiz family members were “missionaries trying to capture weak Jews,” has been indicted on two cases of pre-meditated murder, three cases of attempted murder, carrying a weapon, manufacturing a weapon, possession of illegal weapons and incitement to commit violence.

In interviews with the Israeli media, Yad L’Achim Chairman Rabbi Shalom Dov Lifshitz said his organization wasn’t connected with the attacks of the Ortiz family or with Teitel.

Report from Compass Direct News