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Addressing the FSC-Deloitte Future Leaders awards in Sydney this week, the Financial System Inquiry (FSI) chair and former CBA chief said the GFC is a reminder that major events and dislocations in the financial services industry are extremely costly to an economy, to individuals and to businesses.
Mr Murray said the financial crisis is also a reminder of how the financial services industry is perceived and trusted.
“We are in a world now where in the wake of the crisis many things now will continue to keep calling that trust into question,” he said.
“We have seen massive fines on financial institutions in the United States which make the community anxious, we have seen the ongoing Libor issues in the UK, in
Europe there are ongoing stress tests; and we see the ongoing distortions caused by quantitative easing post-crisis.
“So whilst all this is happening it is causing people and their political leaders to ask ‘what is the culture of this industry and what can be done about it?’
Mr Murray admitted that the structure of financial services businesses are complex and comprise divisions and departments that are interdependent.
This creates a highly complex organisation structure in which it is easy to lose clarity, especially on defining roles and responsibilities, he said.
“Financial institutions have the ability to affect people’s lives in significant ways.
“The GFC helps to remind us of this; the debate about financial advice has helped as well. The message is that when things go wrong they might not be life threatening but they are lifestyle threatening.”
The result is that a community forms a view on whether a financial institution is or is not doing a good thing, Mr Murray said.
“This debate is triggered by an underlying motive of people asking, ‘Can I trust this system? Can I trust this institution?'"
Great leadership will be needed to change a culture of distrust, Mr Murray added.
“Leaders have to develop a great culture and develop it for people that are different,” he said.
“In financial services, we are going through a post-crisis period where trust has had to be rebuilt – I’ve mentioned a number of global issues and we have had issues in this country as well – but if we are going to sort this out we will need great leadership and great building of trust within institutions and to do that, they will need to put human systems first.”