As we reflect on 2018 in financial services – and there is no denying it was quite the annus horribilis – it seems destined to be judged in hindsight as a major turning point for the industry. After several years buffeted by scandals, media exposes and inquiries, three significant events will forever shape the future of not just financial services, but of corporate Australia. 1. The Royal Commission into misconduct in Banking, Superannuation and Financial Services played out in public the failings that had usually remained behind the scenes, dealt with between the institution and the regulator. While the Royal Commission by definition ignored the legitimate, essential and positive outcomes delivered by the industry, it focused on some deeply human and systemic failings that were confronting, and often difficult to solve. Importantly, so many institutions had their behaviours and customer outcomes called into question that one thing was clear: every large organisation has its problems, and falls short of community expectations. And the legacy of ‘The way we’ve always done business’ too often fell short. Hayne attempted to get to the heart of the ‘Why?’, and not just the ‘What?’ 2. APRA’s Financial Inquiry Report into CBA was a seminal moment for corporate governance. Diving underneath the mechanics and structures of governance, it went straight to the heart of human behaviours and failings. It forced the most senior individuals in control of institutions – not only in Australia, and not just in financial services – to ask themselves an important question: what would our version of this Report say? In fact, APRA has made a large number of them actually find this out by requesting a self-assessment. The APRA Report presented an honesty and frankness about what had gone wrong that made everyone read its 100+ pages. 3. The Banking Executive Accountability Regime (BEAR) introduced a new regime of personal accountability for the directors and most senior executive of banks. Arguably, these obligations are not dissimilar to the obligations of Directors and Officers. However, I would argue that BEAR has set up a pathway to change. It has in practice ushered in a new era of focusing senior people on how they define and execute their accountabilities. Any one of these events is significant. Together, they represent a shedding of the old ways. A recognition that many of the industry’s products, processes, systems and structures are no longer fit for purpose when examined in the harsh light of today. They herald that it’s time for a new conversation about how organisations – and not just those in financial services – need to face into problems, make brave choices, and above all, recognise the humanity in not only their workforce and their customers, but also themselves. Author: Karen Den-Toll – Partner Deloitte Governance, Regulatory, and Conduct. Karen leads Deloitte Australia’s BEAR and customer advocacy practices, and is the joint leader of Deloitte Australia’s Corporate Governance practice. For more commentary from Deloitte on the Royal Commission, please click here.