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Behavioral Issues Faced By the Banks

 Should A Royal Commission Be Held Into The Australian Banking System.

The main research topic with regards to this research paper is “should a royal commission be held into the australian banking system?” In addition to this, this research paper would focus on a number of issues that faced by the Australian banks in the current time. Along with this, this research study would provide a clear overview of the Australian Banking system. On the other hand, this study would also address a wide range of behavioral issues in the front of Australian Banks. At the same time, the positive and negative arguments in the context of Royal Commission would be made in order to attain the aims of the study. Finally, the suggestions/recommendations would be proposed to the government in order to use Royal Commission in the Australian Banking system.          

The banking system of the Australia is more competitive, liquid and competitive as compare to the other’s nation banking systems. Moreover, it is also found that, the banking systems of the country is consists with the various banks including corporate banks, retail banks, agricultural banks, co-operative banks etc. It means the banking industry of the nation is characterized with a number of small and large banks under the banking act 1959. In addition to this, it is analyzed that, the banking system of Australia is more effective, dynamic and innovative in term of product range and services. This banking system is helping the nation in attaining economic goals and objectives effectively. In the same way, it can be said that, the banks are playing a lot of fundamental and significant role in the financial system of Australia. Hence, this banking system is characterized with the several functionalities and features that make it more innovative and dynamic (McAllister, Dowrick, and Hassan, 2003).

But, in the current time, a series of complicated and serous issues are faced by the Australian bank in the banking sector of the nation. For example, from the last two to three years, an unexpected amount of challenges/issues with regards to behavior are encountered that negatively affected the growth, success, marketability, reputation, and functioning of the banks in the market. All these also issues also affected the image of banking system of the country negatively in the eyes of public (Bernanke, 2011). For example, many customers of banks had claimed that they are not treated by the banks fairly, friendly and effectively in relation to the different matters.  For example, the banks of the nations are taking unnecessary fees for the various banking services. Most of banks are charging very higher for the credit or debit card services. In the same way, a number of charges such as: hidden costs are claimed by the banks from the customers. On the other hand, the most of the banks does not have proper financial management systems to conduct the transactions (Arnold, 2008).

Royal Commission


Moreover, the inappropriate planning of the bank can also be seen in any banks. For example, the employees or representative does not have sufficient knowledge and information about the financial planning that negatively increasing the costs for the customers and results in financial losses to individual customers. Apart from this, it is also claimed by most of bank’s customers that their banks are not making payment of life insurance claims on the time. They are creating the issues in the front of the banks customer by rejecting the life insurance claims. At the same time, it is also analyzed that, banks are trying to manipulate the customers by minimizing the interest rates on the bank loans. In the same way, various types of hidden costs are charged by the banks to the customer that negatively affecting the financial position of an individual customer of the bank.  Such types of issues are faced by the banks customers that negatively affecting the customers (Millmow, 2010).      

All these banking issues are addressed by the clients, customers, media and political party. Moreover, it is proposed and suggested that, there should be a Royal Commission into banks so that overall issues faced by the customers can be control and handle in an effective and proper manner. Some people are against the use of Royal commission into the banking sector of the nation. It is argued by them that, there is no need of Royal commission into the banking system because of the availability of existing regulatory processes and standards. They also said that, the regularity process and standards would be sufficient to handle such types of issues (Coleman, Cornish, and Drake, 2007). 

In this section of the research paper, the arguments for and against the Royal commission would be made in order to reach valid outcomes.

Arguments for the Royal Commission into Banks:

There are various arguments in the favor of Royal commission that indicates that, the Royal Commission should be held within the Australian banking system. For example, the Royal Commission within the banking systems of the nation can help in creating more accountability and flexibility. For example, Royal Commission would allow the government as well as Reserve bank of Australia to investigate and address the fraud, forgery and allegation with the banking systems and take appropriate actions against the banks for the misconduct and miss presentation. On the other hand, it is also important to know that, by using and implementing a Royal Commission would help the financial sector and banking industry in clean up various serious issues within the internal culture (Abbas, Bouhga-Hagbe, Fatás, Mauro, and Velloso, 2011). In the same way, the banks would be able to re establish and buttress the confidence of customers or communities. For example, according to the Royal Commission, the banks would have to focus on overcoming the challenges and issues of their customer this would motivate, encourage the customers. At the same time, it is argued that, Royal Commission would also bring innovation within the banking sector by solving the issues of their client (Bolton, 2013).

Arguments for the Royal Commission into Banks

They would also be able to generate more profit and revenue by developing strong confidence among the customers. Overall, the Royal Commission would be more valuable, significant and important not only for the banks but also government. It is because it would increase the financial and economic position of the nation.  Moreover, issues related to misconduct, ethical, mispresentation, and misappropriate related issues could also be handled and controlled by the Royal Commission. The banking organizations could not be able to mismanage, and misappropriate customer’s fund (Cherunilam, 2008). Hence, it is argued for the Royal Commission it should be held within the banking sector of the nation to make the system more transparent and easier.  At the same time, it is argued in the favor that a Royal Commission would also address and examine a wide range of banking issues and challenges. For example, Royal Commission would allow to access and prevents illegal and unethical behavior. Moreover, it would be easier to access and analyze that how the banking institutions of the Australia are performing their duties of care to their customers (Jones, 2012).  

There are a wide range of arguments are made against the Royal commission into the banking system of Australia. For example, it is argued that, the Royal commission would pose a wide range of new risks in the banking sector that would negatively affect the success, productivity, organizational image and growth of the banking sector of the nation. For example, if Royal commission would be implemented into the banking sector of the Australia, it would give signal to the lenders of the banks that their banks are not stable and flexible. It would also have negative impact on the accountability and creditability of the nation’s banking system. It would also create negative image of the country’s banking system in the global market. On the other hand, some people argued that, Royal commission would also increase the price of money and the funds would be slower (Coleman, Cornish, and  Hagger, 2006).

At the same time, it is also argued and analyzed that Royal commission is more costly and would take longer time in the implementation within the banking system of the country. For case, it may create unexpected cost not only for a banking firm but also government. This would adversely affect the economic and financial situation of the Australia. It is also suggested that, existing regulations of the banking sectors should be modified to deal with the issues. Along with this, Royal commission could also negatively affect the financial advisors because they don’t have adequate and accurate understanding of banking products and services. Moreover, if Royal commission would be executed within the banking sector of the country, the banks would have to train their employees by investing huge amount. It would directly reduce the profits and revenue level of the banks. Hence, all these are the major arguments against the execution of Royal commission into the banking systems of the nation (Magarey, and Round, 2007).  

Arguments against the Royal Commission into Banks

On the basis of above discussion, analysis, it is recommended that, the government of the Australia should take appropriate actions by considering the social policy initiatives with a big public impact. In addition to this, the government should also play a lot of significant functions and role in the context of Royal Commission. For case, it is more essential and important for the government to sets the scopes of inquiry in an effective and proper manner. Along with this, it is also suggested that, the government of the country should also determine and examine the specific scope and importance of the Royal Commission by deciding on its terms of reference. Apart from this, it is also important for the government to publish a summary of the cost of the Royal commission. In addition to this, the government should publish official inquiry within a reasonable time period (Carroll, 2004).

At the same time, the government should also focus on publishing the updates on the execution of suggestions of an inquiry. In addition to this, it should also be noted down that, the government of the nation must effectively and properly examine the advantages and disadvantages of using royal commission within the banking sectors. Moreover, the government should also analyze the long and short term positive and negative impact on the banking system of Royal commission (Carbaugh, 2008). Each and every fact such as suggestions should be considered by the government in order to take most appropriate and specific decision regarding the royal commission (Muhleman, 2008).

The government must also ensure that institutional knowledge and information have established, conducted and administered by publishing and developing inquires handbook. Moreover, the government should also have arrange and conduct the meeting with the experts to take specific advice on the Royal Commission. So, the government should have proper and sufficient knowledge on the Royal Commission. For example, the government should be consult with the individual, organizations and Indigenous groups because they would have greater impact. Along with this, it can also be suggested to the government that, they must focus on adopting innovative, dynamic and specific techniques and approaches in order to get desired results (Butlin, 2002). On the other hand, the government should also create and develop specific framework to understand royal commission in an effective and more specific manner. In addition to this, the government should take actions as soon as possible on the Royal Commission. Moreover, it can also be said that, the government is the biggest body in the nation that must consider all the aspects of the royal commission (Sexton, 2010). Finally, it can also be suggested that, the government should also consider and analyze the positive and negative arguments made by the people about the Royal commission. Hence, all these are the major suggestions and recommendation to the government of Australia that should be considered before taking any actions whatever the Royal Commission should be used or not in the banking sector of the nation (Macintyre, 2015).  

Conclusion

Based on the given analysis, it can be concluded that, the Australian banking industry is one of the fast growing, biggest, flexible, and liquid that helping the nation in attaining economic and financial objectives in an effective and proper manner. On the other hand, it is also concluded that, in the current time of globalization and competition, there are serious of behavioral banking issues and challenges encountered by the banks in the Australia that adversely affected the growth, success, performance, productivity and marketability. Moreover, it can also be concluded that, these issues are also affecting the customers directly or indirectly. It means unethical treatment; illegal practices, mis-presentation, misconduct, etc are the major issues that are faced by the customers of the banks in the Australia. These issues are also affected the reputation and image of the banking sector negatively in the eyes of the public. At the same time, it is also found that, with the use and implementation of a Royal Commission, various issues could be handled and controlled. So, several positive and negative arguments are made in the context of Royal Commission into the banking system of the Australia. Finally, it is suggested to the government of the nation to take appropriate and effective actions with regards to the use of Royal Commission within the banking sector of the country.

References

Abbas, S. A., Bouhga-Hagbe, J., Fatás, A., Mauro, P., and Velloso, R. C. (2011). “Fiscal policy and the current account. IMF Economic Review, 59(4), pp. 603-629.

Arnold, R.A. (2008). Macroeconomics. USA: Cengage Learning.

Bernanke, B. (2011). Monetary Policy  Policy Report to the Congress. USA: DIANE Publishing.

Bolton, C. (2013). Babel Inc. Australia: Black House Publishing Ltd.

Brezina, C. (2011). Understanding the Gross Domestic Product and the Gross National Product.

Butlin, . N.G. (2002) Recovery from the Depression: Australia and the World Economy in the 1930s. USA: Cambridge University Press.

Carbaugh, R.J. (2008). International Economics. USA: Cengage Learning.

Carroll, B. (2004). Australia's Prime Ministers: From Barton to Howard. Australia: Rosenberg Publishing Pty, Limited.

CCH Australia, Limited (2011). Introducing the Law. Australia: CCH Australia Limited.

Cherunilam, (2008). International Economics 5E. USA: Tata McGraw-Hill Education.

Coleman, P., Cornish, S., and Drake, P.S. (2007). Arndt's Story: The Life of an Australian Economist. Australia: ANU E Press.

Coleman, W., Cornish, S., and  Hagger, A. (2006). Giblin's Platoon: The Trials and Triumph of the Economist in Australian Public Life. USA: ANU E Press.

Jones, G. (2012). Banks as Multinationals. UK: Routledge.

Macintyre, S. (2015). Australia's Boldest Experiment: War and Reconstruction in the 1940s. Australia: NewSouth.

Magarey, S., and Round, K. (2007). Roma the First: A Biography of Dame Roma Mitchell. Australia: Wakefield Press.

McAllister, I., Dowrick, S., and Hassan, R. (2003). The Cambridge Handbook of Social Sciences in Australia. USA: Cambridge University Press.

Millmow, A. (2010). The Power of Economic Ideas: The Origins of Keynesian Macroeconomic Management in Interwar Australia, 1929-1939. Australia: ANU E Press.

Muhleman, M.L. (2008). Monetary and Banking Systems: A Comprehensive Account of the Systems of the United States With Complete Statistical Information. Australia: Monetary Pub.

Sexton, R.L. (2010). Exploring Economics. USA: Cengage Learning.

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