Speaking at the Australian Financial Review’s Banking & Wealth Summit in Sydney this week, Mr Byres said regulators have been accused of being on a “culture crusade”.
“That’s not the case. Indeed, regulators are really keen to see the industry lead the running on this issue,” he said.
“We need the financial sector to take up the challenge to put in place better incentives for prudent behaviour, so as to prevent problems emerging in the first place.
“That is likely to be far more productive than spending our time removing so-called ‘bad apples’ after the fact.”
Mr Byres said that while APRA and ASIC have put culture in the spotlight, the onus is on the financial services industry to do something about it.
“There are good signs that is happening,” he said. “Our engagement with boards has highlighted they are thinking about this issue more systematically.”
Industry-wide initiatives such as the Banking & Finance Oath and the associated Ethical Literacy Program are also encouraging.
“Balancing ethics, prudence, customer interests and shareholder needs in a commercial environment is a challenge that belongs to everyone in financial services,” Mr Byres said.
“We’ve all got work to do to get the balance right and the sins of the past continue to emerge, but at least the issue is starting to get the serious attention it deserves.”