A defining characteristic of the financial services sector is the diversity of its participants – from financial planners to the major and regional trading and investment banks. The breadth of regulation and control that governs those working within the sector is also far reaching. Despite significant oversight by the Federal Government and regulators such as the Australian Securities and Investments Commission, Australian Securities Exchange, Australian Prudential Regulation Authority, Financial Planning Association, and legal and accounting bodies, there continue to be failures in the sector stemming from mismanagement of controlled growth, a lack of internal controls, and governance and fraud issues.
Some of the key issues shaping this diverse sector include:
- unprecedented turmoil in the international markets over the last five years, which has driven major changes across the sector
- a tightening of regulatory frameworks in the international and domestic markets due to the dynamic nature of changes in the sector
- competitive market pressures and the push for higher returns
- the entry of niche players into the Australian market, putting pressure on traditional markets and the major players
- hedge funds buying debt and consequently changing how distressed debt is handled
- the increasing number of well-funded participants within the Australian market, which is creating challenges for the sector’s management.
Questions that should be asked
Participants navigating these broad-sweeping industry issues should consider the following:
- In a low-interest environment, how sustainable are forecast returns?
- Is governance adequate?
- Is market share for the sake of market share sustainable?
Our financial services team works with international and major, regional and niche Australian financial institutions. The depth of our financial services experience is extensive, and ranges from advising on complex banking and financial transactions; restructuring and workout strategies in response to the collapse of major financial institutions; and proactively conducting portfolio reviews to manage and mitigate risk for our clients.