It may not have been Goebbels who uttered the infamous phrase “When I hear the word culture, I reach for my gun”, but the phrase springs to mind in considering the (very rapid) appointment of former Commonwealth Bank head, Future Fund chairman and financial services inquiry head David Murray to the recently vacated AMP chair. While Murray’s appointment to the Brenner Pass has been welcomed, it’s worth reflecting on what no journalist over the weekend except Fairfax’s Elizabeth Knight noted about Murray’s view of regulating culture.
ASIC is pursuing this notion that you can have liability for a culture breach. It is absolutely impossible to legislate for that. In fact you could argue that it’s anti-competitive, because you can’t have the same culture for everyone by definition — a great culture is competitive advantage. It’s anti-competitive. It’s inefficient. And to be perfectly candid again, there have been people in the world who’ve tried to enforce culture. Adolf Hitler comes to mind.
This was Murray’s view just over two years ago. As the royal commission has confirmed for us recently, any comparison of ASIC with an enthusiastic boy scout troop, let alone the Nazis, is the stuff of fantasy. But it reflects how profoundly out-of-touch Murray can be, because it’s apparent that the financial services sector’s problems are profoundly cultural.
Before the government was forced to allow a royal commission, the Australian Prudential Regulation Authority (APRA) and the Reserve Bank as well as ASIC repeatedly outlined their concerns about bank culture. Last week’s APRA review of the Commonwealth Bank was all about the bank’s culture, the failings within it and how the board failed to address them. AMP has already admitted it needs to overhaul its culture. But Murray appears to think culture should be completely outside the purview of regulation — that is, entirely self-regulatory. Because Nazis, or something.
Murray, of course, is well know for having controversial opinions. He thinks the Rudd government should have done exactly nothing in response to the financial crisis except guarantee bank deposits. He is a notorious climate denialist.
But it’s in relation to financial regulation that his views are particularly problematic. A year ago, Murray opined that a royal commission was “not only unnecessary, it sets up higher systemic risk because the outside world doesn’t see the need for one”.
Murray thought the banks were too heavily regulated. “It’s a real problem when you’ve got ASIC bashing the banks on a weekly basis … there’s the cost of anti-money laundering compliance and other regulation, and they’re now funding ASIC as well as APRA. It really is too much.”
Murray’s comments on money-laundering came before the exposure of the CBA’s problems. Perhaps he has changed his view on money-laundering regulation. And perhaps, given the royal commission has gifted him a major chairmanship, he’s changed his mind on that too. Or perhaps he’s still seeing swastikas wherever he looks.
16 thoughts on “New AMP chair’s views on regulation living proof of Godwin’s Law”
klewso
May 7, 2018 at 1:48 pm“Anti-competitive”? When the evidence points to the fact that the “competition” was to the moral bottom, in a race to strip customers of what was theirs?
Murray is typical of the sort who has to be touched by something before they’ll grant it’s existance.
old greybearded one
May 7, 2018 at 2:15 pmWe don’t want the fool to regulate culture, we want him to enforce the law. AMP is not guilty of bad culture, malpractice and theft.
Woopwoop
May 7, 2018 at 2:37 pmA great but unsettling collection of quotes.
Administrator
May 7, 2018 at 3:02 pmThe Australian financial services sector’s problems are twofold.
First, they are oligopolistic and anticompetitive. That has happened by too many mergers, too many bank failures and poor government decisions to permit and encourage “four pillars”.
One result is patent bank collusion on the setting of major interest rates, the design and pricing of products and the gouging of customers. Turnbull has publicly criticised the banks for these practices.
Second, the banks, which enjoy precious public financial assistance in the form of RBA’s Lender of Last Resort Role, have diversified (“vertically integrated”) into other financial industries. The Big Four Aussies have combined market caps greater than all the banks of Europe combined. Do you think that happened because they are better bankers? No, they sponged off the Government deposit guarantee. Make no mistake, that guarantee was sought and provided in 2008 to head off a run on bank deposits. It was provided initially for FREE ! Yes, the government used taxpayer money to directly subsidise bank shareholders. But the banks have undertaken diverse business risks, all underwritten and facilitated by the public’s guarantee. The banks pump up the world’s biggest housing bubble by selling high-risk loans subsidised by the public’s guarantee.
The business practices of the Australian financial services sector are now characterised by price gouging. That has occurred because the oligopoly does not value customers (they have nowhere to run). Fee income has been stacked on top of traditional prices (just like all our many other oligopolies from airlines to supermarkets to communications). That is how business is done in Australia. That is business culture and it is clearly unproductive and inefficient.
Can culture be regulated? I don’t care to debate semantics with David Murray.
Oligopolies can be regulated. Anti-competitive practices can be regulated. Collusion can be regulated. Uncommercial subsidies can be regulated. Divestment of vertical integration can be regulated. The regulators have long had sufficient power to investigate and report and they have failed us.
Why? Because banks have too much influence over political parties.
The CBA letter to customers claims twenty million lost customer account statements is not “compromised” data privacy. It defends its failure to disclose the loss because it did not want to “unduly alarm” customers. It speaks as though it would be realistic to take the same decisions tomorrow. Is that a cultural failure? It is, by any definition of culture that I recognise. Customers are duly alarmed. Can it be regulated? It would have been, long ago, if Truffles had not distracted himself with dual citizenship threats to his parliamentary numbers and credibility.
DF
May 7, 2018 at 3:10 pmIt wasn’t Goebbels, it was Goering, the art thief, who said that he reached for his gun when he heard the word ‘culture’.
Woopwoop
May 7, 2018 at 3:26 pmNo, it’s actually a quotation from a play.;
http://oupacademic.tumblr.com/post/75094913460/misquotation-hanns-johst
2bobsworth
May 7, 2018 at 3:15 pmWhat goes around just keeps comming around….
Its “no more Mr Nice Guy” from a neo-liberal, Bank first, climate denying, profit before culture Liberal. This is the man who started the gold rush, the vertical integration of Banks and Financial sdvice Corporations and Superannuation as fee machines.
Now he’s back to rearrange the deck chairs.
The naming of The Future Fund , one of his best gigs,“was the greatest con still going.
Its a Superannuation Fund, earmarked to pay off the unfunded liabilities of the Federal Govt. for Politicians, Judges and every other Federal super obligation.
Correct me if I’m wrong , but this unfunded liability black hole of debt should have been added to the total Gov. Debt?
Howard, prior to his “retirement” put the minerals boom remnants , and all the swag from selling off the Taxpayers assets, ie: Banks, Telcos,Airports, etc, all went into privileged Federal Super.
All he needs is a decent Tax Cut!
John Homan
May 7, 2018 at 4:19 pmWe don’t need to go back to Hitler, didn’t Margaret Thatcher say that: there is no community, there are only individuals.
“Without exception the dominance and coherence of culture proved to be an essential quality of the excellent companies. Moreover, the stronger the culture and the more it was directed toward the marketplace, the less need was there for policy manuals, organization charts, or detailed procedures or rules. In these companies, people way down the line know what they are supposed to do in most situations because the handful of guiding values is crystal clear”.
(from Peters and Waterman, In search of excellence, 1987.
gjb
May 7, 2018 at 5:22 pmAMP really needs the complete shit kicked out of it… break it up, buy back non-voting shareholders at the share rate average a month prior to these disclosures. recompense all the customers how have been defrauded double the amount + interest.
Disqualify AMP from trading for 12 months & investigate towards criminal proceedings against any members of management at what ever level and the board who was aware or should have been aware these proven criminal activities.
Robert Garnett
May 7, 2018 at 5:34 pmSo you can’t legislate against culture? Maybe not, but you certainly can legislate to prevent egregious behavior. If we legislated against the behavior of the oligarchs who run these totalitarian businesses and locked them up, instead of simply fining their corporations we might in fact find that useful cultural shifts might occur without doing anything else.
The idea that a corporation has the same rights as an individual is a legal fiction created by their lawyers and ultimately their vassals in government. The corporations act which puts the interests of shareholders’ above societies’ best interest would be a very good place to start.
As with the Americans and British, Australians are in awe of the rights of property, or more accurately the rights of those who own property and the more property you have the more rights you have and bugger everbody else. People like Murry are well described by Adam Smith who observed, “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.” Murry is typical of the corporate ilk that are racing us to the financial and environmental precipice in pursuit of this vile maxim.
Norm
May 7, 2018 at 8:23 pmThey were always going to appoint one of the CEO caste, just as those deposed will be recycled to other positions, perhaps less prestigious, but they will hardly be starving.