Maf202 Money And Capital Markets Assessment Answers

Compare, and reflect on, the financial regulatory changes in Australia and China in the aftermath of the GFC. You are expected to highlight salient features of these regulatory changes.

Critical assessment of GFC implications for Australian and Chinese financial systems, highlighting regulatory changes.

Key points:
• How did the GFC affect Australia and China?
• How did the relevant authorities in Australia and China respond to the GFC? Are there similarities or differences in the regulatory responses/changes in Australia and China?

Answer:

Introduction

The Financial sector of the Australia was detonated by recent financial frauds and irregularities observed in the Australian Financial Sector. The Banking groups and other financial institutions accused for selling products and services, which were not in the best interest of the customers. The credibility and goodwill of the Australia Banking group and its financial sector is at stake. It has raised questions about the inefficient rules, regulations and systems of the banking industry. The Governor General of common wealth of Australia has formed a Royal Commission, which will look into the Misconducts observed in the Financial Services Industry, Banking & Superannuation.

Discussions

The Royal Banking commission in Australia came across through many irregular financial activities. These wrongdoings observed by some of the country’s largest financial institutions has questioned the credibility and confidence in the financial sector (Beck and Paton 2018). The commission had its first hearing on 13 March and it will be at regular intervals as the case proceeds in the year 2018. Australia’s major banks, financial planners and other small finance and wealth companies involved in alleged bribery, improper verification of customer’s background and there living expenses, false documentary was used for lending money to the consumers at terms, which were not justified, and in the best interest of the consumers.

 There were many banks, which were involved, in this financial fraud like common wealth bank, National Australia Bank, ANZ, Westpac (McIlroy 018). The banks forms the major composition of the Australia Banking group and these institutions are inquired about these financial issues. So this banking intuitions and financial services who used to sell this financial services and products to the consumers making many profitable opportunities. The banks in turn of providing financial services to its customers had mislead people to be exposed to those products and services, which were in turn offered by the company. These products included financial investments and different products offered by the company. The business model which the banking institutions which the financial institutions were playing is the vertical integration of business by cross selling its product in the form of financial services which indirectly influenced the customers for subscribing or investing in a certain investment of products (Gowland 2018).

The Australian Mutual Provident Society originated in 1849 as a non-profit life insurance company and mutual society. The Royal commission has come across the fact that the banks were charging there customers for products and there services from which the consumers were no longer related (Matthews 2018). The Commonwealth Bank of Australia, which is the largest bank of the Australia, was acquainted of the fact that the banks used to charge its customers who were already dead. Certain cases reported to the royal commission about these issues by the banks included these irregularities and improper policies and regulations, which were ineffective by the financial sectors. The National Australia Bank, NAB who is one of the largest financial institutions in the financial sector of Australia was accused  for producing false witness signature by the financial planners of the banks where the same was done to cross sell the products and services to the consumers irrespective of his/her background and profile screening. The Australia and New Zealand Banking Group, ANZ was accused that several Financial Adviser and Financial Planners were charging the customers of the bank on behalf of the bank even though the bank claims to have suspended all the Financial Advisory functions. Westpac Banking Corporation, Australia second largest bank questioned with its Credit worthiness for the fact that the banks were giving loans and advances to the borrowers without proper screening of the profile and background of its customers (Smith 2017).

The Australia Banking Royal commission established in the field of Misconducts observed in the Financial Services sector, Superannuation and Banking (Wishart and Wardrop 2018). The Governor-General of Australia Honorable Sir Peter Cosgrove AK MC did the establishment on 14 December 2017 ("Financial Services Royal Commission - Home" 2018). The Honorable Kenneth Hayne AC QC is acting as the Royal Commissioner for the same who will be submitting an interim report for the Misconducts in the financial service industry. On 30 September 2018, the commissioner will be submitting an interim report for the same and a full-fledged final report by 1 February 2019. The commission comprises of five counsel assisting along with the commissioner who will be engaged in investigating all kind of financial services entities who are engaged and were reported for misconduct (McIlroy 2017).

The Royal Commission is assisting people for making any necessary submissions for misconducts observed in the financial Industry. The royal commission will be checking that whether all financial institutions were having sufficient mechanism to compensate the victims. The commission is accepting submissions against the misconduct report and has divided it into different rounds of hearing (Tomasic 2018).

Conclusion

The Royal Commission has uncovered about the wrongdoings happening in the country’s largest financial institutions. These had undermined the credibility and goodwill of the Financial Industry. The commission had already began its hearings and has already claimed scalps and discussed several issues by which banks and other financial institutions are advising its customers.

The Royal Commission will be submitting its first Interim Report by the end of September 2018 after all misconducts reports is received by the commission. It will also provide a final report after all the hearings and discussions by February 2019. The Royal Commission will also consider sufficient mechanisms rules and regulations to make the system effective and compensate the victims.

Reference

Beck, J. and Paton, G., 2018. Corporate law: The Royal Commission: Corporate culture spotlight: Where is all this heading?. Governance Directions, 70(6), p.351.

Financial Services Royal Commission - Home. (2018). Retrieved from https://financialservices.royalcommission.gov.au/Pages/default.

Gowland, R., 2018. Culture and life: Racism and capitalism. Guardian (Sydney), (1825), p.10.

Matthews, C.D., 2018. Banking inquiry revelations are rocking Australia. What would a NZ inquiry reveal?.

McIlroy, J., 2017. Bank royal commission: Is this the last straw for Turnbull?. Green Left Weekly, (1164), p.4.

McIlroy, J., 2017. Banks halt ATM fees to head off royal commission. Green Left Weekly, (1155), p.11.

McIlroy, J., 2018. Bank scandals fuel calls for completely new system: Why we should nationalise the big four under democratic control. Green Left Weekly, (1178), p.8.

Smith, K., 2017. Australia to boycott nuclear disarmament negotiations. Green Left Weekly, (1127), p.7.

Tomasic, R., 2018. Corporate Crime and Corporate Culture in Financial Institutions: An Australian Perspective. In White Collar Crime and Risk (pp. 283-315). Palgrave Macmillan, London.

Wishart, D. and Wardrop, A., 2018. What can the Banking Royal Commission achieve: Regulating for good corporate culture?. Alternative Law Journal, 43(2), pp.81-88.