The Australian financial services sector is in an eerily similar position to the UK industry before it was hit with a regulatory crackdown, says former Barclays executive Steve Weston.
Former Barclays head of mortgages Steve Weston, who spent four years at the UK bank when it racked up record fines for foreign exchange manipulation, spoke at the Banking and Finance Oath conference yesterday.
Mr Weston left Barclays in December 2016 to return to an Australian industry where "the similarities between the UK are certainly growing more stark".
The chief executives of the major Australian banks are saying the same things as the UK bosses were before they were hit with more than $5 billion in fines by US and UK regulators, he said.
"[Australian bankers are saying] 'leave us alone, no need for a royal commission, we'll get the ABA to do our bidding for us, we'll make banking better'," Mr Weston said.
The tone of Australian politicians is becoming more aggressive, just as it did in the UK, he said.
The Coalition's major bank levy is similar in structure to the UK levy that was imposed on the big banks (and subsequently raised nine times).
Mr Weston also pointed to measures in the federal budget to make bank executives more accountable and foster more competition.
Executive accountability was a "big inflection point" in the UK, he said.
"The challenge for us, as it was in the UK, is that society's expectations had moved much further than we as banks could keep up with," Mr Weston said.
"My sense is that as the weeks go by we're getting closer to the UK position rather than further away from it."
Mr Weston said it is not "practical" to expect the banking industry to self-regulate, saying "it's got to be done to the industry [by ASIC]".
BT chief executive Brad Cooper, who appeared on the same panel as Mr Weston, challenged the idea that Australia is headed down the same path as the UK.
"There aren't too many parallels between the UK and the Australian circumstance – we were very differently positioned going into and out of the GFC," Mr Cooper said.
Australia doesn't have subprime lending or 'rent to buy' schemes like the UK, he added.
"The regulatory environment here with APRA and ASIC is a very different regime. So yes we've still got things to do but we're at very different starting points as well compared to where the UK was," Mr Cooper said.
However, Mr Weston replied that there are issues in Australia that are "almost identical" to the UK experience, including the manipulation of the bank bill swap rate and financial planning scandals.
"They all started out the same. Whether we'll end up in the same place only time will tell," Mr Weston said.