One of the least surprising revelations to come out of last week’s Turnbull Government announcement regarding a Royal Commission inquiry into the banking sector was the fact that the big four banks had requested it.

There was no other choice but to support a Royal Commission.

Clear the decks. Lance the reputational abscess and, in its healing aftermath, create a new public narrative. There is also the hope too that the Commission’s terms of reference bring in known miscreants still operating within our financial ecosystem.

Last year I was invited to a meeting with one of the big four banks running a large financial planning operation. I was offered a brief. Some might call it the impossible brief: “How do we sell the positive benefits of vertical integration?’ was the fundamental request.

It’s an interesting proposition when you sit down dispassionately and think about it. On balance, there is a reasonable argument for the security of large, big balance sheet players that sit behind their products and services should things go pear-shaped for customers. Or there is the cost of business argument – allow absolute public disclosure (sans the transfer pricing accounting) reveal the true cost of delivering effective risk insurance, investment products and advice…to show how shaky the sector would be without the large players.

Nice ideas, shame about the timing.

For in the current environment our response was short: “Sorry, guys, buckets of lip gloss can’t make that pig attractive. At least not now. Swimming against a tide of consumer trust deficits, intense regulatory scrutiny and the (then) threat of a Royal Commission means, unless you magically change the underlying business model, there is no way to create positive momentum – even with the squeakiest of clean intentions and consumer best interest embedded in your culture.”

Or words to that effect.

The notion of benevolent capitalism is a noble and worthy thought, but are the banks really going to shift focus and profits away from their shareholders to deliver it?

Either way, our view then, as it remains today, is that the best option for those operating in the banking and wealth management sector, with vertically integrated, shareholder models is to show not tell us that they have nothing to hide.

Co-operate with High Court Judge Kenneth Hayne and his Commission, and use this moment in time as a catalyst – a historical rebalancing of the trust pendulum. The pain in the long run will be worth it, and it may also prove preferable to reputational death by a thousand paper cuts each time another negative news article or fresh legislation lands.

As the largest part of the modern day, services-based Australian economy the financial services sector has a lot of reasons to get this right. It is hoped the year-long Hayne review will deliver on the promise of a ‘root and branch’ investigation.

This month marks an historical moment of our own. Owing to increased demand and growth for ethical communication counsel backed by deep industry nous, our business has changed its name, its address and is busy increasing its head count. Read about it here, and thanks for your support!

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