Category: Conduct Risk

Royal Commissioner – the Australian regulatory system is broken!

Posted on by pjmcconnellrisk

It’s like a Monty Python sketch – “This parrot is NOT dead – see, it’s still paying life insurance! Why would it do that if it was deceased? Who would be silly enough to sell a dead parrot life insurance?”

Justice Hayne, Commissioner of the Royal Commission (RC) into Misconduct in the Financial Industry in Australia, asked a similar question and in the commission’s Interim Report provides some to the point answers:

  • greed – “the pursuit of short-term profit at the expense of basic standards of honesty”; and
  • because they could – “when misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done”.

Continue reading “Royal Commissioner – the Australian regulatory system is broken!” →

Banking Misconduct is the Symptom not the Cause!

Posted on by pjmcconnellrisk

In its first few weeks, the Royal Commission into Misconduct in the Financial Services industry has opened the floodgates, and a torrent of misconduct, maladministration, technical incompetence  and downright fraudulent activity has poured out.  And it is not just one bank that has admitted some wrongdoing, but all of the Big Four.  Nor is it one product but, so far, a raft of bad lending, from mortgages to overdrafts and car loans, and more to come.

[Note An edited version of this article appeared in Australian Banking and Finance on 24th March 2018.  Many thanks to editor Elizabeth Fry.]

Continue reading “Banking Misconduct is the Symptom not the Cause!” →

Royal Commission shows tone from the top is silent

Posted on by pjmcconnellrisk

The Royal Commission must investigate failures of Corporate Governance in the big Australian banks.

Like a grand Verdi opera, the Royal Commission (RC) into Misconduct in the Financial Industry is moving inexorably towards its climactic final act (or, in dry legal terms, Round 7).

The Commission may not end with the traditional ‘fat lady singing’ but likely with a parade of bank CEOs being wheeled in, to be publicly eviscerated by the Commissioner, Justice Haynes, and his ferocious counsel assisting, Rowena Orr QC.

[Note An edited version of this article appeared in Australian Banking and Finance on 16th September 2018.  Many thanks to editor Elizabeth Fry.]

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JPMorgan – Yet another Conflict of Interest Problem

Posted on by pjmcconnellrisk

So much for shiny, new Codes of Conduct.

Tidying up before the end of the financial year, JPMorgan Chase and the Securities and Exchange Commission (SEC) and the Futures Trading Commission (CFTC), agreed a fine of $307 million on the company and unusually an admission of wrongdoing [1].
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Barclays – Another Code of Conduct failure!

Posted on by pjmcconnellrisk

Another day, another banking scandal!

Just this week, the New York State Department of Financial Services (NYDFS) hit Barclays bank with a huge fine of US$ 150 million, as a result of the bank admitting it had “engaged in certain misconduct regarding the trading of benchmark foreign exchange (“FX”) rates from at least 2008 through 2012 in violation of the New York Banking Law and other laws” [1].

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A festering SORE

Posted on by pjmcconnellrisk

On September 11th, twelve ‘Too Big To Fail’ (TBTF) banks reached an in principle settlement in a class action lawsuit to resolve investor claims that the banks conspired to fix prices and limit competition in the market for credit default swaps (CDS).

The historic settlement is estimated to cost some $1.865 billion which, as the claimants’ lawyers said [1], was “one of the largest antitrust class-action settlements” in the financial area.
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Too Big to Care – BNY Mellon?

Posted on by pjmcconnellrisk

In April 2015, two UK subsidiaries of the Bank of New York/Mellon (BNY Mellon) were fined some £126 million for failing to “consider properly the interests of their clients”. BNY Mellon is the largest custodian bank in the world and one of the world’s Systemically Important Banks (SIB).
But has BNY Mellon become Too Big to Care?

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HSBC – Board-Level People Risk

Posted on by pjmcconnellrisk

Both the Chairman and CEO of the banking behemoth HSBC have recently appeared before the Treasury Committee of the UK Parliament in connection with the Swiss Tax Scandal [1]. The bank’s Board had previously issued an apology for the scandal to its shareholders and the public in general [2].

The argument made by the HSBC Board is basically “We didn’t know, how could we? We are a huge organization. It would not happen today”.

Ignorance is bliss.

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A Personal Code of Conduct?

Posted on by pjmcconnellrisk

In July 2104, the recently divorced Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) came together once more to produce a Joint Consultation Paper entitled ‘Strengthening accountability in banking: a new regulatory framework for individuals’ [1]. Following the scandals of the GFC, LIBOR and PPI, the regulators believe that holding “individuals to account is a key component of effective regulation”. The regulators pointed out that their extensive proposals were intended to “create a new framework to encourage individuals to take greater responsibility for their actions, and will make it easier for both firms and regulators to hold individuals to account”.
The key words throughout the consultation paper are ‘individual’, ‘responsibility’ and ‘accountability’.

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