It was a thoroughgoing apology from Commonwealth CEO Ian Narev in July 2014. Amidst the turmoil of revelations about the shonks and spivs of Commonwealth Financial Planning, senate committee inquiries and Adele Ferguson routinely exposing more scandals, Narev wanted to apologise to victims of CFP. “I unreservedly apologise to all customers affected. Poor advice provided by some of our advisers between 2003 to 2012 caused financial loss and distress and I am truly sorry for that,” Narev said. And he was at pains to state that this was atypical of the Commonwealth Bank.
The way in which we have transformed our CFP and FWL businesses over the past three years shows our commitment to ensuring that the best interests of our customers are always our first and foremost consideration. This transformation brings CFP and FWL in line with our other businesses at the Commonwealth Bank.
Judging by yesterday’s extraordinary evidence from the banking royal commission, it seems more like CFP already was in line with other business at the Commonwealth Bank.
When Narev was uttering warm fuzzies about how “the best interests of our customers are always our first and foremost consideration”, his bank was selling credit card insurance to people who would never be able to make a claim on that insurance. Nine months after Narev’s statement, an internal report found that 64,000 people had been sold credit card plus products by the bank that they literally could never use, because they were unemployed.
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Somehow, a few weeks later, that number shrunk to less than 28,000 when the Bank alerted the corporate regulator the Australian Securities and Investments Commission about the problem. “The problem was incorrectly stated,” an under-the-pump bank executive admitted to the commission yesterday.
As Crikey noted back in 2016, statements like Narev’s, and the sort of guff bank executives have been offering at parliamentary inquiries, are part of the banks’ method of avoiding serious scrutiny: apologise, insist that the offenders are rotten apples in an otherwise wonderful barrel — or at least are “out of line” with the rest of the bank — that there are no cultural problems. And nothing ever changes — there’ll simply be a future CEO offering the same apologies and explanations for another scandal, at a later point.
Well, here we are.
This is why the government didn’t want a banking royal commission. Because it knew its donor mates in the big four had plenty more scandals to hide. And, worse, they wouldn’t be able to use warm and fuzzies to protect themselves as with a bunch of politicians pursuing 50 different issues in an hour-long inquiry appearance. There’s nowhere to run and nowhere to hide from Kenneth Hayne and his counsel assisting Rowena Orr, no playing for the clock, no fobbing them off, no taking questions on notice, no playing defence until another questioner jumps in. And if you happen to be economical with the truth, well, the penalty is a little worse than some public embarrassment.
And thus, barely into a second week, we’re already losing count of the scandals uncovered.
Which brings us to a regulator to whom the existence of the royal commission is an implicit, but very real, rebuke: ASIC. ASIC, the performance of which during the CFP scandal would have been a comedy were it not for the grim human toll, has a new chairman, James Shipton. Shipton has been offering his own warm and fuzzies in a speech yesterday, about the issue of “trust” and how to address the lack of trust in the finance industry.
The prevalence of scandal in the financial sector was partly due to a lack of professionalism, Shipton said. And that could be addressed by the industry. “Industry, and the people within it, need to do more and need to take more of a leadership role,” according to the chairman. He said there was an opportunity for “the industry itself, working with standard setting and professional bodies, to promote and perhaps even require, professionalism within their sectors. In other words, there is a window of opportunity for the industry to take the lead without the imposition of a regulatory catalyst.”
All these years on, at a point where it’s hard to actually keep track of major banking scandals, as ASIC — which, we were told by a desperate Turnbull government, had the powers of a standing royal commission — battles the banks in court over rate-rigging, as every day of the royal commission uncovers some entirely new shambles from within the banks, the new head of ASIC is talking about avoiding regulating the finance industry and allowing “the industry to take the lead.”
You wonder what it would take, if anything, for ASIC to muscle up and actually do its job.