Individuals, not corporations, stand to lose the most from the royal commission into banking, superannuation and financial services, warns law firm Holding Redlich.
The upcoming royal commission into banking, superannuation and financial services has called for a variety of financial institutions to identify any misconduct that has taken place since early 2008.
According to Howard Rapke, Melbourne managing partner of law firm Holding Redlich, such conduct includes misconduct by an entity’s directors, officers, employees or anyone else acting on its behalf.
Such misconduct, as defined by the terms of reference of the royal commission, may include having broken a Commonwealth, state or territory law, misleading or deceptive conduct (or both), breaching trust or duty or unconscionable conduct, or a breach of professional standards, Mr Rapke said.
Financial services entities (including super funds) will have to decide “what misconduct they may want to own up to, when to not do so may mean that at some later stage … they could be criticised for not doing so”, he said.
As a result, corporations may decide it is in their best interest to self-report misconduct that is likely to directly affect individual directors, officers or employees, Mr Rapke said.
“It cannot be forgotten that although banks, insurers or superannuation entities may be the subject of media coverage resulting from the royal commission, if there are subsequent prosecutions bought by regulators for matters resulting from the royal commissioner’s final report, the biggest impact is upon individuals, not corporations,” he said.
“Corporations may be obliged to pay fines, they may be the subject of some publicity and there may be an impact upon their share price but it is individuals whose careers and reputations may be seriously affected.”