#BankingRC misconduct: Not a victimless crime

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Such human rights impact of financial misconduct is an untold story that needs telling, today of all days, writes Professor David Kinley.

THE Universal Declaration on Human Rights is 70 years old today (10 December).

Born of a fervent post-war wish not just for peace and freedom, Eleanor Roosevelt’s United Nations Commission also sought greater equality and economic justice.

So, how do those aspirations fare in today’s ever more financialised world? Certainly, the world today is safer, healthier, smarter and richer, and financial wealth has played an important role in all of this. But is it economically fairer, more equal and less divided? 

One way to address these questions in a "lucky country" like Australia, is to use the Financial Services Royal Commission as a window into the state of our relationship with wealth. Or, more especially, with those who manage our wealth.

Amidst the noise and colour of the parade of financial skulduggery unearthed by the Royal Commission, not a mention of the human rights impacts is to be found. Yet, misconduct in financial services and behaviour that fails to meet community expectations are not just matters of legality and professional ethics — they are infringements of peoples’ basic human rights.

Long before the Royal Commission was established, my colleague Dr Kym Sheehan and I suspected this was the case. Coming at it from opposite directions, it seemed to us that human rights impacts must be inevitable, no matter how the misconduct was characterised in legal terms. So we set out to test our suspicions. 

We analysed some 314 cases of misconduct of Australian banks and financial services entities as recorded by the ASIC in the 20 months between 1 January 2017 and 3 September 2018. Our results, detailed in the report, 'Community Expectations: Putting People Before Profit Means Taking Human Rights Seriously' , show that in all cases involving relationships between a financial services entity and its customers or clients (some 255 of the 314 cases), at least one – and in most instances, more than one – of four identified human rights categories have been abused.

The rights categories (and abuses) are:

  • rights to privacy and information (doctoring data to benefit lenders at the expense of borrowers and charging fees for no service);
  • rights to economic security (deceptive or fraudulent behaviour that robbed people’s savings and investments);
  • rights to non-discrimination (targeting of indigenous communities with manifestly inappropriate products); and
  • the right to remedy (banks and insurers obstructing or dragging their heels on investigation and resolving complaints).

All of these actions damage people’s financial health in ways that we simply would not tolerate medical practitioners doing to our physical or mental health. But that’s what happens when profit is put before people, no matter what your bank’s revamped mission statement claims to the contrary.

We shouldn’t be fooled into believing that the financial services sector has turned a corner and that such behaviour is now behind us. Shocking stories are still emerging of predatory behaviour toward the poor, disabled, sick and dying such that you wonder (as did Voltaire) at the dehumanising powers of financial greed. And there are no signs of that the tide of disaffection is ebbing.

The Commonwealth’s new one-stop-shop for all financial services complaints – the Australian Financial Complaints Authority (AFCA) – has already been inundated, having received nearly 7,000 complaints since it opened its doors on 1 November. That’s a 47 per cent increase on the rate of complaints received by the three bodies it has replaced, combined. 

The impacts these complaints represent are not restricted to anodyne commercial concerns. Very often, as we have shown, they strike at the heart of people’s lives; at what they have striven to construct for themselves and those around them. And it is that – the sense of personal betrayal, of not being treated with respect – that fuels the keenness of their grievance.

Such human rights impact of financial misconduct, we argue, is an untold story that needs telling. Today of all days.

Professor David Kinley is Chair of Human Rights Law at University of Sydney Law School and author of Necessary Evil: How to Fix Finance by Saving Human Rights. You can follow David Kinley on Twitter @dwkinley. Read 'Community Expectations: Putting People Before Profit Means Taking Human Rights Seriously'  here.

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