On 4 February this year, Commissioner Kenneth Hayne delivered his final report on the financial sector summarising Australia’s most exhaustive review of our corporations, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Following 68 days of evidence and over ten thousand public submissions, all of Justice Hayne’s 76 recommendations will be enacted by the Federal Government.
The first step was intensifying penalties for institutions that were non-compliant with ASIC practice codes. Last year, the Commonwealth Bank was fined a world-record breaking $700 million for misbehaviour – a decision that has corporate Australia on high alert.
Because it's not just banks, super funds and financial services that should worry.
One of the most obvious indications that Justice Hayne’s recommendations are likely to impact other Australian industries was his emphasis on culture as a ‘rootcause’ of corporate misconduct.
He noted that assessment of culture should be seen as an essential part of prudential supervision and that governance was a key factor in the code violations examined during the commission.
Further,he warned that delivering short term-profits does not necessarily equal acting in the best interest of the company, saying: “Much if not all of the conduct identified … can be traced to entities preferring pursuit of profit to pursuit of any other purpose.”
And while there may not be anything wrong with the pursuit of profit, Justice Haynes' report suggests that when not balanced by a sense of fairness, it's usually the vulnerable who are most exploited.
The inference is that acting in the customer’s best interests is the single most effective way corporations can ensure they comply with the new regulations.
The stakes have never been higher.
These findings will resonate with the boards of most publicly listed companies for whom the competing demands of shareholders and customers is a constant juggle.
Post the Banking Royal Commission, it's evident that corporate culture has a significant effect on all staff conduct from the top down to customer-facing representatives – when executives values profits over customers, it reverberates all the way down the operational chain.
When performance is based on ensuring profits rise year on year, customer-facing employees’ priorities are inevitably skewed against the consumer’s best interests (to get the fairest deal possible)–resulting in potential code breaches that will now cost the organisation dearly.
And ignorance about whether one’s staff aren’t complying with codes can no longer protect boards or directors from their legal obligations to consumers. The risks of liability, greater scrutiny, prosecution and even actual jail time are now more real than ever.
Indeed,the pressure is on for every business listed on the ASX to comply with regulations more efficiently and transparently. The question remains – what’s the best way to achieve this end?
Mystery shopping can help.
If you've ever wondered what your customers experience when dealing with your business, Mystery Shopping gives you the answers you need to survive and flourish in a post-Banking Royal Commission world. It’s the only way to examine and monitor staff compliance and customer experience adequately to shield your organisation from prosecution.
Mystery shoppers are professionally trained to gather the range of pertinent data about employee code compliance you need to defend your corporation from the severe consequences of code violations.
They’re able to deliver crucial unbiased insights about the customer experience that companies can act on to improve their practices, processes, and products. They can report on how employees conduct themselves when interacting with customers and highlight potential problems and future training opportunities.
Improving customer experience can rewire an organisation to fix the root cause of code violations and misconduct. Corporations able to perceive the world through their consumers’ eyes and ensure their journeys are positive and fair will maintain their competitive edge in the face of a changing business landscape.