Steve Tucker has admitted he faced tough commercial opposition as he sought to transition MLC away from commissions in the years before the GFC.
Mr Tucker, who headed up MLC for close to nine years until he departed in March 2013, broached the topic at a recent Banking and Finance Oath (BFO) event in Sydney.
Speaking to InvestorDaily, Mr Tucker said the goal of the Oath is to encourage a financial services environment in which “more and more people feel confident to have a conversation around what’s right or wrong”.
“How do people confront the challenging issue of making a call that might be seen as being an ethical call that might not necessarily be commercially sensible?” he asked.
Speaking personally, Mr Tucker said MLC’s transition to a fee-for-service financial advice model as early as 2004 was “not well received in many places as the right way to go”.
“At the time, what we were trying to do was to say ‘until somebody raises this as an issue that people should be aware of, nothing’s going to change’,” he said.
From a financial planning point of view, you can have “99.99 per cent of people doing the right thing”, but when something goes wrong and there is a commission structure in place, “you don’t have a very strong defence”, Mr Tucker said.
“We had conversations [at the BFO event] around how do you make those calls, and did it cost us commercially – which it did, of course, in the short term,” he said.
“But in the long term, it’s been a good call in terms of creating a sustainable business model [at MLC].”
Ultimately, it is the individual who chooses whether or not to act ethically, said Mr Tucker.
“So we haven’t asked companies or institutions to sign up or support the Oath. What we’ve said is that this is a personal accountability for people who operate in the industry,” he said.
The BFO contains nine ‘commitment’ statements, including “Trust is the foundation of my profession”, “I will pursue my ends with ethical restraint”, “I will speak out against wrongdoing and support others who do the same” and “My word is my bond”.
Alongside Mr Tucker, notable signatories include RBA governor Glenn Stevens, and businessman and 2011 Australian of the Year Simon McKeon.
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