Australia’s big banks slammed for greed and dishonesty
The big four banks Down Under have come under fire by the Royal Commission for their greed, lack of honesty and misconduct.
In the “Misconduct in the banking, superannuation and financial services industry – Royal Commission – Volume 1 – Interim report”, it says conduct by financial services entities – i.e. ANZ, Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Westpac – “has brought public attention and condemnation”.
This Commission has been going on for a while. As reported in May the CBA admitted its planning arms breached the Corporations Act when it charged clients – including some who had died – fees for services they did not receive.
In the lengthy interim report, published today (28 September), the Commission says some conduct was already known to regulators and the public generally; some was not. The Commission conducted six rounds of public hearings.
There is simply too much to mention but the report says the failings happened because “too often, the answer seems to be greed – the pursuit of short term profit at the expense of basic standards of honesty. How else is charging continuing advice fees to the dead to be explained?”
It goes on to says that banks, and all financial services entities recognised that they sold services and products. However, “selling became their focus of attention. Too often it became the sole focus of attention. Products and services multiplied. Banks searched for their ‘share of the customer’s wallet’. From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales”.
The big four have responded of course. No need to mention them all, but as an example, ANZ CEO Shayne Elliott says: “We accept responsibility and we are determined to improve.”
According to the interim report, when misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done.
The conduct regulator, Australian Securities and Investments Commission (ASIC), “rarely went to court to seek public denunciation of and punishment for misconduct”.
The prudential regulator, Australian Prudential Regulation Authority (APRA), “never went to court”.
The report explains: “Much more often than not, when misconduct was revealed, little happened beyond apology from the entity, a drawn out remediation programme and protracted negotiation with ASIC of a media release, an infringement notice, or an enforceable undertaking that acknowledged no more than that ASIC had reasonable ‘concerns’ about the entity’s conduct.
“Infringement notices imposed penalties that were immaterial for the large banks. Enforceable undertakings might require a ‘community benefit payment’, but the amount was far less than the penalty that ASIC could properly have asked a court to impose.”
This is not a pretty picture, and the Commission wants to prevent such conduct happening again.
We’re not there yet as the Commission asks: “Should the existing law be administered or enforced differently?”
There will be a further round of public hearings to consider such a question, and other matters, that must be dealt with in the Commission’s final report. These things always drag on.
You can read the full interim report on the Australian parliament’s site here.