The Hayne Report - A Good First Step or a Missed Opportunity?
Media Release - February 2019
Ethical investment manager UCA Funds Management welcomes the recommendations of Commissioner Hayne’s final report in addressing misconduct in financial services. However, it sees this as just an initial step for financial services organisations to increase consumer protections, regain the trust of the community, and maintain their social licence to operate.
U Ethical has a long track record of advocacy and engagement on responsible banking issues with the big four banks and other Australian financial services firms. It continues to leverage its ethical funds to right harms and create positive impact: from giving a voice to the vulnerable affected by irresponsible and predatory lending both in Australia and offshore, to supporting increased penalties for corporate misconduct, to engaging with boards and banking executives on changes to remuneration practices and culture.
U Ethical’s Director Investments, James Cook, said “While we applaud the initiatives announced and acknowledge the actions pre-emptively taken by the banks prior to the publication of the final report, we also believe it is a missed opportunity on several fronts. For example we believe the remit of the enquiry was too narrow, and should have been broadened to include unscrupulous payday lenders.” He also called for improved transparency in hidden fees and costs across financial products along with improved financial literacy education to better inform consumer decision-making.
The principle that companies shouldn’t profit from harm has driven U Ethical’s recent corporate engagement, concentrated around timely remediation and advocating for banning the use of credit cards for online gambling. “The final report was light on addressing remedies for consumers from irresponsible lending and in certain circumstances an obligation to forgive debt might encourage better compliance” said Mr Cook.
While the reforms announced are far-reaching, both the banks and the government need to ensure that funding for implementation of the recommendations is adequate and that the required legislative reform is well-supported. U Ethical will continue to advocate for transparency and corporate accountability in line with the expectations of its ethical investor clients.