As we head into the final hearings of the year-long Royal Commission, what have we learnt? What are those in the sector taking from the Royal Commission so far and how has it impacted customer behaviour?

With an interim report providing no draft recommendations, there is still much speculation. However, there have been glimpses of what is to come and how financial services providers can prepare for 2019.

Obey the law

Whilst there were no recommendations per se, the first of Commissioner Hayne’s key guiding principles in his 1000+ page interim report was ‘obey the law’. This suggests that more regulation won’t necessarily be an outcome of the Royal Commission. There is already a high volume of regulation in place, it just needs to be followed. 


Financial Service providers should prepare for more stringent reviews of their adherence to regulation. Whilst further regulation may not be the focus, we can expect stronger enforcement of the regulation – enforcement that is a financial deterrent for organisations of all sizes.

Delivering positive customer outcomes

This has been a theme throughout the Royal Commission and will no doubt be a new mantra for some within the sector. To truly deliver on this, systems, processes and resources need to be put into place that can support this change in culture. 

Saying you will deliver positive customer outcomes is one thing, but the ability to deliver the products to enable this is another.

  • Can your systems support the product?
  • How will legacy products be removed? Can they be removed?
  • Are your M&A targets’ products aligned with your customer service culture?

Whilst many organisations demonstrate a customer focus by employing a chief customer advocate, it is often the larger organisations that can afford this – and these are often the same organisations that have been highlighted for not delivering on customer outcomes. 


  1. To truly deliver the best customer outcomes via the best customer products, legacy products should be removed, not phased out.  Implementing such a strategy requires a change management process and possibly major technical system changes.
  2. If thinking of employing a chief customer advocate, clearly define their role.  What is the difference between this role description and the customer service expectations you have of all staff? It could be argued that if all staff are acting in the best interests of your customers, a chief customer advocate is not only redundant, but implies a lack of customer service throughout the entire organisation.

A focus on the process of governance rather than the principles

Much of the Royal Commission has focused on the role of the Board, the information they have access to, and the decisions they have made.

It could be said that small organisations have boards that come from industry and therefore a stronger understanding of the issues, and larger organisations have so many subcultures that it is difficult for a board to truly understand the culture and make an impact. In some instances the internal audit function has done a great job, it just hasn’t been listened to by the Board, and others may see their role as a board member as more of a social function than the importance they have on the lives of the organisation’s employees, customers and communities in which it serves. 

However, size is not an excuse for not being close to your customer.  Examples were provided where our roundtable guests had worked in other industries (often overseas) in organisations that compete on size with our large banks, if not bigger. The financial reward of every single management staff was dependent on them spending at least one week per year on the front line, in customer facing roles.  The impact being a strong customer service culture throughout all parts of the organisation, along with respect for the role that every employee has in contributing to that culture.


As we have seen in the UK, which has a clear focus on corporate governance, the nature of boards is likely to change which may see many people leave their board positions or reduce the number of boards they sit on, as more time and effort will be required, along with deeper ramifications for not adhering to the Board’s principles and industry body governance.

Identifying breaches

The guidelines or regulation for identifying breaches is where all of this comes together. How are they identified, what is the timeframe, and how are they enforced?

This is not a new issue with financial services institutions already struggling with this from a process perspective, let alone having the ability to train front line staff to pick up these instances in a timely manner. 

  • A breach may not have an impact for 10 years or more, by which time the consumer may no longer be able to be compensated. 
  • When does the clock start on a breach? It may be easy to identify and report, but extremely timely to investigate.  By reducing the investigation time to avoid penalties will the investigation be impeded and a less favourable outcome achieved?
  • How does ASIC actively follow up all of these breaches, and will it be with a broad brush approach?


The regulation around breaches and their penalties is not an easy process to agree upon nor implement.  This is something the Commissioner will need to carefully manage to ensure the financial institutions are penalised appropriately whilst achieving favourable customer outcomes.

The 7th and final round of hearings focusing on policy questions arising from the first six rounds well be held in Melbourne and Sydney from the 19th November to 30th November 2019.  The final report is expected to be submitted on 1 February 2019.

This Royal Commission has set the tone for future Royal Commissions, with a real focus on positive outcomes for the customer. With all the submissions and hearings being made public, it is the first time such detailed information has been made available, which may have an impact on future criminal proceedings and class actions. It will be interesting to see the Royal Commission into Aged Care and Safety unfold, as it too has customer outcomes at its core, only with stronger emotional impacts.


Further insights on the Royal Commission can be found here.

Our first FS on the Radar podcast can be found here.  Listen to Madeleine Mattera and Darren Scammell discus the Royal Commission’s Interim Report and how it affects the Financial Services industry.

A Case for Proportionate Regulation - Read our Positioning Paper here. Our paper on the true cost of regulation will be published on Friday.

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Financial Services Podcast Series

The FS on the Radar Podcast Series explores the latest news and regulatory changes impacting Australia’s Financial Services sector.

List now to FS on the Radar Episode 1

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