It’s easy to point the finger at financial institutions these days. But the system is arguably a reflection of the consumerist society it serves.
Greed drives most Western economies. Australia is no different. If we all suddenly decided to stop spending money – even for a week – the country would be in turmoil.
The entire financial system depends upon our belief that we need more stuff: investment properties, shares, cars, fancy clothes and watches, overseas holidays, retirement. Some insurance for the lot of it.
In reality, we don’t need any of these things to live a long and fulfilling life. In fact, frugal communities have been cropping up across the globe since the global financial crisis, turning their backs on consumerism and finding traditional ways to feed, clothe and house themselves. This is nothing new; the Amish have been following an order of simple living for generations.
For the majority of the population, however, banks have become the necessary enablers of consumerism and therefore the economic prosperity of the country.
Wealth management and financial advice are largely dependent on the concept of ‘retirement’. Nobody ever considers the alternative: continuing to work or living more frugally.
Instead, we are all driven by a fear that we will not have enough money to fund ourselves between the last day of our working lives and the day we die. What to do with this gap of time and how we fund it has spawned the superannuation industry and large chunks of the wealth management industry too.
The desire to have more, both in our working lives and in our retirement, has created the modern banking system that we have today. There are far simpler ways to live (and arguably simpler ways to run banks) but we have a part to play in creating the monster that is under the spotlight today.
In a one-sided circus like the Hayne inquiry, we will never know to what extent bank customers are willing to bend the truth to get a loan approved. All we hear about is how the banks failed to determine the customer’s financial position. Whether or not the customer knowingly lied about their earnings and expenses is apparently beside the point.
With regards to financial advice, likewise we will never know how much clients of financial advisers were pushing for returns. How aggressive were they to make sure their money made more money? How upset were they when things didn’t work out? Where does their resentment fit on a scale between personal accountability and ASIC’s best interest duty?
Society’s greed, which has become the status quo, has contributed to the mutation of the financial system.
Misconduct has eroded our trust in major financial institutions – there is no doubt about that. But how much do we trust ourselves to be disciplined with our own money?
Banks, wealth managers, insurance providers and financial advisers are not the only ones guilty of misconduct. Greedy consumers tend to bend the rules and lack accountability too.