The Oath

Trust is the foundation of my profession.

I will serve all interests in good faith.
I will compete with honour.
I will pursue my ends with ethical restraint.
I will help create a sustainable future.
I will help create a more just society.
I will speak out against wrongdoing and support others who do the same.
I will accept responsibility for my actions.

In these and all other matters;
My word is my bond.

The Vision


A banking and finance industry that
meets the community’s needs and has its full confidence thereby fulfilling its integral role in society.
This article was originally published in the AFR, 22 November here  (Paywall)       


Corporate regulator Greg Medcraft has vowed to double down on his cultural crusade and fight his landmark rate-rigging cases for many, many years because the banks wrongly believe it is still "just a case of a few bad apples".

The chairman of the Australian Securities and Investments Commission urged boards to do more to set the culture "from the top" and sign the Banking and Finance Oath, which top executives at the Commonwealth Bank of Australia have refused to sign.

"Having seen in Australia the financial advice scandals, the responsible lending scandals, the life insurance, the general insurance, one of the biggest issues for organisations is they have to recognise is often it is not just a case of a few bad apples, at a point there is some problem with the tree," Mr Medcraft told a Banking and Finance Oath panel in Melbourne on Tuesday.

"I still find some very large organisations think it's a few bad apples when in fact you've got to go to the root cause of the problem and say what created all of these bad apples?
 
"Every time we scratch the surface whether it be in insurance or lending or advice, it doesn't come up good. That is why this campaign is really important because it is up to them to win back trust and it is not just a matter of talking about it ... actions speak louder than words and that is critical."
 
CBA chief executive Ian Narev came under fire at last month's parliamentary banking inquiry for not signing the Oath – which outgoing CBA chairman David Turner and other leading CBA executives have also refused to sign – claiming he didn't need to sign the voluntary pledge, which includes a short series of commitments such as "my word is my bond".

"The sole reason I haven't to date is not because I don't agree with the content, which I do wholeheartedly. My view is that the day I took the job I signed up for that, I made that commitment to all our stakeholders," Mr Narev told the parliamentary committee.

We can fight BBSW for years

Mr Medcraft rejected suggestions that ASIC's resources are being drained by the bank bill swap rate (BBSW) cases against ANZ, Westpac and NAB and said the regulator is willing to fight the case for "many, many years".

The Australian Financial Review reported last week that ASIC had spent over half of its $90 million special enforcement fund though the cases remain in their preliminary stages. Sources said the banks may now seek to delay the cases until after Mr Medcraft vacates his role in November next year. ASIC have not ruled out launching a related case against CBA.

"It's very important we send the message that no one is beyond the law," Mr Medcraft told the Financial Review after the panel.
"At the end of the day, we have to have credible outcomes for Australians and we have not been reluctant to take on anyone, we have the resources, despite your article, we have the resources for many years, many, many years," Mr Medcraft said.
"I accumulated a lot of special enforcement funding and we do get $350 million a year."

Boards can do more

A panel of industry representatives including chief executive of JP Morgan, Robert Priestley, and director at Suncorp, Premier Investments and Breville Group, Sally Herman, agreed with Mr Medcraft that culture cannot be regulated but joined him in calling for boards to do more.

"What do I need to do to get ahead around here? If I'm observing a bully is being promoted and a cheat is getting a bonus then I am going to be pragmatic and adjust my behaviour accordingly," Ms Herman said.

"I don't think anybody goes into an organisation with a view to compromising their personal integrity but if that is what you see being rewarded, that's where boards and management have to go right into an organisation and find ways to interact with employees."

Middle management to blame

However, the panel warned the blockage for creating cultural change may rest with middle management, which human resources executives have begun to referring to as the "permafrost" within organisations.

"In the middle [management] I think people in their late 30s to upper 40s have had a lot of opportunity to get into the workforce, they have had constant pay increases, only a little bit of shock during the GFC but most of them didn't lose their job or even have pay reductions," Banking and Finance Oath director Clare Payne said.

"They are now parents of younger kids, they can sort of see how their career could end in 10 years and they just want to stick it out, pay off the house and get it all done so there is not much incentive for them to stick their head up and get involved in this."
Mr Medcraft agreed that in addition to executives and the board, "it does come back to the middle management, the missing seat and making sure this doesn't become white noise".

Mr Medcraft also backed sweeping new federal whistleblower laws that were agreed on Monday night to secure the support of Nick Xenophon and Derryn Hinch to pass the government's industrial relations bills. The whistleblower laws will protect individuals in both the public and private sectors and provide for US-style bounties, an idea long trumpeted by Mr Medcraft.
"My suggestion was the whistleblowers should be compensated, I think whistleblowers should be valued," Mr Medcraft said.