Three of Australia's most senior banking figures are calling for a change of culture to fix the scandal-ridden financial planning industry.
The scandal has rocked the big banks, with apologies from their heads, calls for a royal commission and massive payouts underway.
Australia's most senior banker, Reserve Bank governor Glenn Stevens says trustworthiness of planners appears to have eroded while incentives paid to them have grown.
"Finance depended on trust, and where trust had been damaged, repair was needed," Mr Stevens told a banking summit in Sydney on Tuesday.
"Without, in any way, wanting to pass judgment on any particular case, root causes seem to include distorted incentives coupled with an erosion of a culture that placed great store on acting in a trustworthy way."
Commonwealth Bank chief executive Ian Narev said banks should hire advisers who are more focused on the customer, rather than bonuses and commissions.
"The starting point on culture is the same fundamental tenets which should govern financial services and continue to, which is be ethical, be customer focused, have strong values," he said.
"The system hasn't always honoured those values... but those values must remain the bedrock of the culture."
David Murray, the head of the government's financial system inquiry, said the problem of mis-selling - misleading an investor about the characteristics of a product - has been a problem overseas as well.
"This has caused people to really question the trustworthiness of people in the financial sector and whether they are acting in their own interests or the general interest," he said.
"It'll be important for individual organisations to question the incentive consequences of the remuneration restructures they adopt."
National Seniors chief executive Michael O'Neill said that, with a growing proportion of the population retiring, it is crucial to fix financial planning.
Record low interest rates for fixed income assets are hurting superannuation balances, but there is reluctance to move into riskier assets because of doubts about the quality of financial advice, he said.
"Trust has disappeared in the financial advice area and that will make people more cautious on shifting away from traditional cash style deposits," he said.
Share
