He spoke at the FSC conference this week, and told attendees that it was vital the sector focused on building customer trust - but it had some challenges.
“You don’t need me up here banging on to know this is true,” he said.
“But the public don’t believe you know it. Or if you do, that you are really going to change it. I see how hard many of you and your firms are trying to shift the way you operate to earn my trust and that of your customers.
“But I really don’t think they [the public] see it. The issues highlighted by the Australian Royal Commission have probably set this back a good bit, even on this side of the Tasman, but in any event change was moving slower than it needed to.”
He said the banks had become financial services "supermarkets" and it was possible they had spread themselves too thin across product lines.
“Synergies and cross-selling never happened naturally and forcing them has led to bad outcomes. Shareholder expectations emphasising short-term earnings over long-term value drove boards and management beyond the bounds of what was decent and right.
"The focus on serving shareholders above all else, in much of the current Western corporate law model, might be argued to be at the heart of the issue. You can debate whether the current model is too heavily focused on returns for shareholders or returns for management. It certainly doesn’t look like it’s too heavily focused on returns for customers.”
Everett said there was no point having financial services leadership “pontificating at the top” about treating customers well unless they built the systems, controls and culture to do it.
“Even the best management team has little chance of being everywhere at once and in every decision.”
Firms needed to look at things such as what the criteria was for paying people, the design principles for new products, how complaints were handled, and how training and processes were built so customers understood the limitations of products sold to them.
“Some of the firms that strike us as having a genuinely client-focused culture in some parts, don’t in others. Even those that do aren’t always creating and embedding the repeatable processes and requirements internally to ensure it happens every time. You can’t “will” good conduct on a financial services firm above a certain size. You have to wire it in."
Everett said "real crooks" did not go into regulated financial services.
“There are too many rules and there’s too much risk of getting caught. They set up on the edges and they try to operate out of the sight of the referees. But what seems to happen in financial services is an insidious slide into ‘it feels a bit tacky but everyone else is doing it and we can’t afford to be left behind’.
"Changing profitable practices and behaviours that seemed fine only a few years ago because the expectations of customers and regulators have changed seems hard. Well, have some faith in the long-term power of trust and the differentiator that trust and fairness will be. You know it makes sense."
