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Banking royal commission shows it’s a jungle out there and we must protect ourselves

Just when you thought the royal commission into misconduct in the financial services sector couldn’t get any worse, it does.

The latest round of inquiries into life insurance, and the startling revelations that have come from them, have once again shown that the banks, and others, are often prepared to put profits well ahead of the health and wellbeing of their customers.

On many occasions, they’ve been forced to admit as much.

Once again, we have been reassured that the man in charge of the commission, Kenneth Hayne, sees the bad behaviour for what it is.

Such as this comment in response to CommInsure persuading the corporate regulator, ASIC, to water down a media release that would have revealed the insurer had been “misleading and deceptive” in the advertising of trauma insurance which wasn’t what it purported to be.

“The regulator asking the regulated whether the proposal was sufficient in the eyes of the party alleged to have broken the law. Is that right?” asked the commissioner.

But while policymakers and regulators ponder how to better p

Banks, and others, have a huge advantage if they are determined to act unethically, because so many of us are not financially literate.

The latest study by ASIC shows that 65 per cent of people don’t know how much super they have; 60 per cent don’t understand the concept of diversification; 35 per cent find dealing with money stressful; nearly 20 per cent of people are struggling with credit card debt.

Even if you understand numbers, the intricate details of insurance policies, superannuation and loans can be very confusing.

Raising financial literacy will help tip the scales back in the customers’ direction.

In fairness to the banks, they are sponsoring programs in the financial literacy space.

For example, one major bank, in conjunction with the Federal Government, has a program aimed at raising financial literacy in Indigenous communities, which has reached more than 30,000 people.

What we’ve learned from the royal commission, though, is that the jungle out there is much more dangerous than we’d thought.

There are some big predators waiting to pounce, and we need to protect ourselves because, so far at least, nobody else appears to be.

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