RBA Governor Glenn Stevens says that while he is supportive of regulation and initiatives aimed at curbing misconduct in the banking and finance industry, it will not change its culture.
Speaking recently at the Australian Financial Review’s Banking & Wealth Summit, Mr Stevens said the issue of misconduct has loomed “larger and longer” than predicted a few years ago.
“Investigations and prosecutions for alleged misconducts are ongoing, and it seems in some respects our own country has not been entirely immune from some of this,” he said.
Mr Stevens said the real causes seem to include distorted incentives and an “erosion” of the culture of acting in a trustworthy way.
“Finance depends on trust. Where trust has been damaged, repair has to be made,” he said.
“Accordingly, both the industry and the official community around the world are working hard in clarifying expected standards of behaviour.”
Mr Stevens said that in the end, culture and character cannot be legislated or regulated.
“Culture has to be nurtured, and that’s not a costless exercise. Character has to be developed, and it has to be exemplified in behaviour,” he said.
“For all of us in the financial services and the officials sectors, that’s a never-ending task.”