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Commission's darkness shows need for clarity

Complexity and opacity can be the enemy when communicating and building trust, and short-term momentum can cause long-term damage. Consider the numbers in Week 1 of the superannuation round at the Financial Services Royal Commission:

  • Over 50 times, NAB's Paul Carter answered with some variation of "I don't recall"
  • 178 online articles mentioned the 'dark' or 'darkness' of the superannuation industry
  • 0 customers affected took the stand.

As we make sense of the task ahead for the industry in restoring trust, we’ll share our observations as communicators. There’s no silver bullet fix, but there are ways to stop, or slow, the reputational crisis.

What a difference a month makes

The Commission was back with Round 5 on superannuation, and the difference from the previous round could not be more marked. While the plight of farmers gripped the nation’s hearts and minds in Round 4, there’s been nothing gripping about almost two weeks of a dry and detailed "war of attrition".

It’s not that coverage has particularly dropped off in volume. Media and public appetite for the cut and thrust has waned, as evidenced by the rote reporting and lack of distinguishing headlines or rallying cries familiar in previous rounds. In fact, those pitiable figures forced to sit in the stiflingly warm courtroom trying to understand what's going on have griped increasingly openly about the simultaneous boredom and difficulty of faithfully depicting the proceedings.

So anaesthetised by the tedium and complexity have the media become that they’ve turned to reporting on the challenges faced in recruiting staff for AMP and CBA, contemplating Andrew Thorburn’s pinstripes, Chris Kelaher’s pocket squares and Ian Silk’s moustache; and even describing their own routines. Hardly surprising for a round with no case studies and “trolleys full of binder books”.

This is welcome news for some – the quieter the better – while others have warned of the dangers of turning away. The Age said that “Australia’s biggest financial swindle” was unfolding in plain sight, saying that “if you have no idea what I’m talking about, or lack the desire to understand the detail to follow, it’s even more likely that you’re caught up in it. And if you tune out again now, you’ll miss … an opportunity for … financial redress.”

Shot to the foot

But perhaps the settling dust has its upsides. For one, it lessens the risk of Treasurer Scott Morrison's threatened "own goal” of the Commission causing a credit crunch. There have been heavy casualties in the Commission so far – not least a deterioration of public trust in the system and its institutions – and the toll will only rise as it continues. Rightly so many would say; it’s time to pay the piper. But others, arguably with motive, have been able to take a more moderate tone this week, thanks in part to the lack of case studies.

Without the relatable and emotive faces reminding us of the human impact, the dialogue has moved into a more sterile and logical space, one that allows for voices saying “We don’t want to get carried away or throw the banking baby out with the bathwater.” Such comments would have been fatal in the first week of July.

Many continue to see tightening credit, profit dives, falling house prices, and other macros blamed in large part on the Commission, as harbingers of a market shift that could have significant knock-on effects to consumers. Some looking ahead at the longer-term consequences of community anger and loss of confidence see a future where those currently being vindicated end up paying a hefty price.

Just as Commissioner Kenneth Hayne raised the question of criminal conduct, the Greens seized the moment to launch their message that it is “time to break up the banks”. Their language had all the evocative decaying mortality of Metaphysical poets, with the “rot”, "toxicity" and “cancer at the heart” of the financial system. They spoke of the rotten foundations of our banking and financial system, but even those who agree with them must also concede that it’s very hard to keep anything up if you remove all the foundations at once.

Hayne has a responsibility. He redrew the lines in the sand to remind Australia that he is not there to advance victims’ interests, air all the case studies, or rule on law breaking, but to find out the truth of “what was done or not done”. But does he also have an – at times potentially conflicting – fiduciary responsibility to the overall structure and stability of the system? And where does this trump his more overt role?

Heart of Darkness

From overt to covert, if there is one theme that did manifest this week, it was that of suspicious secrecy. Senior Counsel Assisting the Commission, Michael Hodge, started us off on Monday by asking:

“What happens when we leave these trustees alone in the dark with our money? ... Consumers are unable to do anything more than peer dimly through the darkness of their superannuation trustees … [with] no dedicated and active conduct regulator shining a spotlight on the trustees and searching out bad behaviour.”

Not for the first time, Hodge’s imagery found roots, with illustrations of an "opaque", "sinister", and "murky" industry "shrouded in darkness", keeping members in the dark about "the dark art" and "true dark heart" of it, while Hodge is credited by the media with “peeling back the details” and “shining a light”. Bad timing for NAB’s bid for secrecy on documents.

Though revitalised, this language isn’t new to the Commission. The balance of opacity and transparency, simplified to dark and light, has been mentioned before, e.g. with the AFR’s contention that “some funds are beacons of light but there are still too many that are opaque’, and Scott Morrison’s glee over "a rather large spotlight shining on the misconduct within our banks".

Darkness has always been a cypher for enemy, fear, blindness and misbehaviour, while light is clean, pure and revealing. It’s not always objectively true, but the binary is powerful enough that assumption will overtake.

What does this mean for corporate comms?

Simplicity works, transparency works. It’s not enough, as super funds and others affected by reputational damage and stakeholder mistrust move forward, to have nothing to hide. You must also communicate; consistently, clearly, candidly. The structure of products, the nature of the business, the application of fees, must be understandable and accessible. Even given that necessary complexity in the system must be explained to the stakeholder, and especially the consumer.


Carden Calder is Managing Director and Founder of BlueChip Communication. Gigi Shaw is Senior Consultant at BlueChip Communication.


August 18, 2018

A woman in our town stole $4000 and was sentenced to nine months gaol.

How is that crime any different to what we are hearing in this Royal Commission other than being on a smaller scale?

Any bets on a banker going to gaol?

August 21, 2018

Because there's a difference between outright, deliberate theft by a single person and a systems failure or misconfiguration - that system having hundreds of people responsible for it in different ways - that causes a negative outcome for customers, and a consequent failure, moral or otherwise, to correct the consequences of that failure.

This sudden lust to throw people in jail is very disturbing - you're aware that everything you're hearing at the RC was self-reported to the regulator?

Who would you jail, exactly? If you think that bank execs get paid too much now, you won't like where it goes if they have to factor the possibility of jail time into their remuneration calculations.

Geoff F
August 22, 2018

You don't seem to have understood that the vast majority of what has been revealed by the RC, over and over and over again, is not due to "system failure or misconfiguration", but due to deliberate management policies and decisions, overseen by their Boards, and has been allowed to continue for years, and that there have been deliberate decisions made by management and others, including trustees, to deceive and mislead the regulators on an ongoing basis. This has not been about "system failure and misconfiguration" and that you seem to believe that it is, shows a remarkable level of misunderstanding about what has actually occurred, and been revealed and admitted.

As for your comment "you’re aware that everything you’re hearing at the RC was self-reported to the regulator?", i am lost for words. Feel free to believe it, but I hear a lot of scoffing coming from the direction of the RC rooms, and the offices of the regulators.

As to who would be jailed, that's a question to be answered by the relevant authorities. Let's see what comes out of the RC recommendations. Haven't there already been comments made about referring various matters for potential criminal proceedings?

Finally, if you think that internalising the costs of the disgraceful and arrogant behaviour that has occurred is an acceptable arrangement, we have very different thoughts on the matter. How about Boards and management just acting ethically - if u think there are valid and acceptable reasons for charging people for NO service, and continuing same after they've died, feel free to prosecute your case.

Ditto decisions by management about reimbursing super fund members out of their own super fund pockets, for the mistakes and poor decisions of others, as apparently has been reported in relation to IOOF. Again, feel free to argue your case.

I look forward to seeing the report and recommendations of RC Hayne.

Phil K
August 16, 2018

Let's hope we don't just end up with "revenge" regulation. Our greatest fear should be that financial advice virtually disappears (due to the risk and cost involved in providing it). This will save many people from getting bad advice but also prevent many more people from getting good advice.

Gary M
August 16, 2018

It's a lawyers'picnic, cherry picking all the stuff-ups but they are getting to market structure and conflict of issue matters. I fear if there there is no balanced sense of caveat emptor, there will be no incentive to take risk or provide value adding services, and a bunch of laws aimed at protecting customers will end up producing the opposite.

Geoff F
August 21, 2018

Gary M,
While I understand and agree with your point re caveat emptor, what has been clearly revealed by the RC is not about "no incentive to take risk or provide value adding services" - but rather what many people would regard as morally and ethically repugnant behaviour at financial institutions, including such behaviour as taking money for NO service, charging dead people for NO service, reimbursing super fund members out of super fund reserves etc. IMHO it is less about introducing "a bunch of laws aimed at protecting customers" but bringing to account those who commit behaviour that many argue is already against existing laws. If people and companies break laws, prosecute them, and send people to jail where appropriate. Unless and until people are sent to jail, the execs and higher-ups will escape, and only shareholders will cop the impact of fines and penalties. The strategy of the toothless ASIC and APRA whereby they seem to be hoping that companies can be cajoled into not doing the "wrong thing" has failed. Hope is not a strategy. Send people to jail and execs and boards will get the message.

August 16, 2018

The fact that zero customers affected took the stand is the crux of the whole problem. 90+% of Australians have no idea what their balance is, no idea of how much they’ll need in ‘retirement’, no idea if they’ll have enough money for enough time, etc, etc. So if people are not continually watching and checking on their money and if the regulators are asleep, super funds will loot the honey pot of other peoples’ savings.

Nobody will go to jail over all of this. The banks/fund managers (ie the shareholders) will cop some lame fines (not like the multi-billion dollar fines in the US and Europe) and they’ll just move on to the next dark room.


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