03 9948 2100info@dewintern.com

Royal Commission sets high reputational bar

Home / Royal Commission sets high reputational bar
Back to News

Royal Commission sets high reputational bar

Attending the Financial Services Royal Commission’s first hearing this morning was enlightening not only to the legal fraternity but to those of us charged with protecting corporate reputation. Commissioner Hayne stated that the issues he will inquire into will be considered in the context of community standards and fairness, not simply the letter of the law.

Despite being described as a ‘black letter jurist’, he interestingly referred to “alleged misconduct beyond acceptable community standards” as being one of the tests he will use. This is arguably a lower test than much of current legislation, regulation and codes of conduct and, notably, not a black letter test.

The Commission asked 48 financial services entities to provide comprehensive submissions on potential misconduct and has received 385 submissions from the public to date, with more expected. Hayne stated that the Commission intended to compare whether there is a gap between what the industry sees as misconduct compared to what the public see to be misconduct. In this way he hopes to uncover the “nature, extent and effect” of behavior that has fallen below community standards.

Commissioner Hayne also referred to the Murray Report which he said aimed to ensure an “efficient, resilient and fair” banking system. The Commission’s first background paper discusses factors that go to efficiency and resilience but does not discuss fairness.

Counsel Assisting, Rowena Orr, said consumers had not “always enjoyed the right to be treated honestly and fairly” and this was unlikely to meet community standards. One may speculate that the theme of fairness will be returned to during the Inquiry.

As stated this morning, the Commission is not adversarial litigation, it is an inquiry. As such, while legal teams protect organisations against imminent and future legal risk, enormous effort will be required to protect them from the reputational risks that Hayne clearly laid out this morning.