Panel session on Global Banking and Finance Integrity featuring Robert Johanson, Dr Deen Sanders, Assc. Prof Pamela Hanrahan and Dr Hugh Breakey. Source Supplied
RACHAEL HERRAMAN
Since the Global Financial Crisis (GFC) in 2007, the finance world has been facing numerous ethical and integrity issues especially in regards to trust and security.
Assc. Prof Pamela Hanrahan speaking at the Global Banking and Finance session at the Global Integrity Summit. Source Supplied
Speaking during the Global banking and financial Integrity talk, Associate Professor Dr Pamela Hanrahan from Melbourne Law School said Integrity in financial systems should do what is expected.
“[Integrity] should do what it is designed to do, safely, efficiently and fairly,” Dr Hanrahan said.
Formerly with the Australian Securities and Investment Commission, Dr Hanrahan said there are numerous areas of concern in regards to tackling the financial integrity challenges of the future due to the actions that occurred during the GFC.
“When you think about the types of integrity failures that were seen in the [financial] system in the GFC and the subsequent result of that, there’s the usual roll call of low level dishonesty and the engagement of various tasks of unattractive behaviour,”
“There is a sense in the community that there’s been a degree of recklessness by financial institutions whereby big bets were taken and those institutions and the people who worked in them kept the benefits and then socialised the losses,” she said.
Dr Pamela Hanrahan: "Financial institutions make money from complexity" #integritysummit15 @Integrity_20
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Dr Hanrahan also said during the GFC financial institutions created problems with the products they created.
“What we saw in the GFC was that it was in the financial institutions interest to create increasingly complex products and to sell those to customers without a real appreciation that those products could cause a very significant loss for the people who held them,” she said.
When it comes to a banking perspective, Chairman of Bendigo and Adelaide Bank Limited Robert Johanson said the recent capital raising seen from banks such as Westpac, needs to be done in order to strengthen a bank’s balance sheet.
Robert Johanson: When you talk about the integrity of a banking system, think about whether it works. #integritysummit15 @Integrity_20 1/2
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“The reason why some banks are raising capital is because the regulator authority has decided that [effectively] the risks to the taxpayer are too great and so they need to raise more capital,” Mr Johanson said.
Discussing the impact of Global Banking and Finance, Robert Johanson Source Supplied
“The way the banks were running themselves was entirely correct under the rules that applied a year ago but now the [Australian] regulator has decided, appropriately that more capital is needed,” he said.
According to Mr Johanson, there are some criticisms that can be made in regards to Australia’s current bank situation.
“The criticisms you might make are that our banks are high in profitability and strong and secure, but that’s means they’re not actually that competitive against each other.
Johanson: A real question to the world's banks is whether or not the underlying issues of 2006 [GFC] have been addressed #integritysummit15
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Although there are some areas of concern, Mr Johanson said there are also areas Australia shows great financial strengths in.
“We’ve got a banking system that is probably the envy of most of the world,
“There aren’t many banks left in the world that are ranked as highly as our banks,” Mr Johanson said.