Australia’s bank bosses have accepted the need to admit past wrongdoings, says APRA – and more scandals are likely to "come to the surface" as a result.
Appearing before the Standing Committee on Economics on Friday, APRA chairman Wayne Byres said the chief executives of Australia’s major banks recognise that they “must do better”.
“They are looking harder for instances when things have gone wrong and people have been mistreated and so more is coming to the surface,” Mr Byres said.
The next phase will be a “confession of the sins of the past”, he said – adding it could be a positive thing for the industry.
“It’s good that banks and other financial organisations are looking harder for potential problems,” Mr Byres said.
It is vastly preferable for banks and other financial organisations to report problems themselves, he said.
“I’d much rather that they detected them, reported them, told the customers and compensated than APRA or ASIC finding the problems,” Mr Byres said.
“Because if we find the problems, the system hasn’t been strengthened.
“To the extent that they are finding them, then I think that’s a cleansing of past issues.”
Asked separately what ought to be done to promote competition within financial services, Mr Byres said it was important to improve transparency and comparability.
“The capacity for consumers to understand and compare and switch [is vital],” he said.
“The financial system is very good at adding bells and whistles and various things that actually make it very difficult [for consumers] to understand and compare.”
The facilitation of fintech is also an important factor when it comes to competition in the sector, Mr Byres said.
“That’s going to transform banking. There will be a challenge for some of the smaller organisations to actually keep up with technology development,” Mr Byres said.
“And you don’t want to see technology lead to a reduction in competition because the smaller organisations can’t compete with the investment.”
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