Mar 20, 2018

Lies, damned lies, and banking mea culpas at the royal commission

While the banking royal commission exposes scandal after scandal, the corporate regulator is still uttering platitudes about the sector regulating itself.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

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.

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20 thoughts on “Lies, damned lies, and banking mea culpas at the royal commission

  1. Damien

    Bernard forgot to reiterate his usual insistence that there is no housing bubble, record housing debt in Australia is based on responsible and prudent lending and bank customers comfortably have the means to service that massive debt.

    He also forgot to reiterate his usual point that anyone who has been warning otherwise is just a chicken-little doomsayer crying wolf…

    1. bref

      To be fair, its difficult to have a housing bubble if the market is several hundreds of thousands of homes below market demand. Even when interests rates inevitably rise and many homes come back on the market it will still not be enough to meet demand.

      1. Damien

        The old “supply and demand” argument.
        Demand can be as high as you like, housing PRICES are determined by available credit.
        If that credit is being handed out imprudently, we have a housing bubble.
        If demand exceeds supply it gives lenders even more incentive to lend imprudently (as clearly being shown by the RC).
        High demand simply makes the housing bubble even larger as credit-driven “equity valuations” are used to push credit growth even further, creating a self-perpetuating feedback loop where prices being paid (based on credit issued) can increase almost exponentially. Sound familiar?

        1. bref

          Accounting 101. Supply and demand. The more properties available, the cheaper they are. No ifs, no buts. All other factors that affect pricing pale in comparison.

  2. Desmond Graham

    poor banks – all large organisations have the same problems the ‘executives’ do not know what is happening at the coal face. Same result, same problems, same ‘oops-sorry’ if it was a Royal Commission into the Commonwealth or State public services or big mining companies . So the Banks are not alone but easily identified – this is a multi-million waste of time and money as nothing really can change the same forces [or physics of finance] are fixed the only alteration is a procession of Mea culpa. Why not institute a 5 yearly -mea culpa ceremony – just before Bank Holiday

    1. Ian Brown

      “– this is a multi-million waste of time and money as nothing really can change the same forces [or physics of finance] are fixed ….”.
      What rubbish – it might suit you to believe in the “physics of finance” (lol) but the crimes of the banks are caused by humans operating in a neo liberal environment dating from the 1980s / 1990s and can be changed by humans (a reversion to tougher regulatory standards along with a few years in prison for offenders should do the trick).

      1. Nudiefish

        I’d be interested in all these examples you might have to support that position. From my observations “tougher regulatory standards” are about as real as the tooth fairy.

    2. Dog's Breakfast

      Not a waste of money Desmond. Accountability, even in this limited form, is essential, and we haven’t got to anything where prosecution is likely.
      Nothing can be done? What about the Reserve Bank getting into basic banking, as outlined by Nicholas Gruen, to provide some actual competition.
      It ain’t over yet.

      1. lethell

        Or even a return to a state bank with a fixed low interest rate for first-home buyers: that was how the older generation bought their first home. The Commonwealth Bank really was the Commonwealth Bank and bankers were respectable and responsible members of the community instead of the sly predators they now are.

  3. Marcus Hicks

    No wonder Malcontent resisted calls for a Royal Commission-& no wonder he placed such limitations upon it when he finally acquiesced.

  4. Dog's Breakfast

    While ever there are staff bonuses reliant on pulling revenue, the culture, by definition, will be about screwing the customer. This is the very definition of culture – what are you there for?

    Serve customers? Nup. Provide an efficient and cost effective banking system, under the explicit Federal licence and the implicit social licence? Nup

    Make money, from our customer, who can only go to another bank! – Yep!

  5. MJM

    I must say I am enjoying this RC – or at least the tv snippets of it. “There’s nowhere to run and nowhere to hide from Kenneth Hayne and his counsel assisting Rowena Orr, … ” Hayne’s and Orr’s faces express exactly how I feel at some of the responses that are made.

  6. Bob Hatton

    Shock horror.
    Banks screw over customers.
    Well welcome to capitalism 101.

  7. AR

    I expected less than SFA from this heavily circumscribed, ToR bound, RC and have been pleasantly surprised.
    Trouble is, us wot fink facts matter will, eventually, in the sum of things, when all is said & done and bearing in mind the many interdependent exigencies which we cannot, nay may not, be allowed to know of lest we express admonition, it’ll all turn out to be the fault of the tea lady or in these non gender specific daze, the postboy.
    …pop! this one is a cheeky red from the windward side…

    1. bref

      On the other hand we might get tough new regulations like what most other OECD countries have.
      Yeah, right. LOL.

      1. Peter Wileman

        Iceland jailed 29 of their versions of ‘bankers’ in 2008. Malcolm continues to protect ours.

  8. klewso

    “Banking”? It’s a game isn’t it?
    1) We earn our “money” and their aim is to try to get it off us?
    2) For the CEOs of the biggest profiteers get bigger bonuses?
    3) They get caught being amoral – to separate us from our hard-earned – and then they have to divert $millions to the advertising industry for advertising, to try to buy back public trust – as if that’s “For Sale”?
    4) Spending our money (that could otherwise be earning more interest) on those campaigns?
    5) While the Limited News Party government protected them and their profits, part of which goes to donations to it?
    Isn’t that the way “The System” “works”?

    1. bref

      Thats the way our system works. It doesn’t have to be this way but, except for some docile tinkering at the edges, neither labor or liberals will upset their corporate mates.

  9. Nudiefish

    One day we will learn that big business will play fair only as long as a regulator has its foot upon their neck. Once you remove the foot it is back to the ancient tricks – like having a hundred “different” financial products that have no benefit other than lining corporate pockets.

  10. RoRo

    ASIC is staffed by finance industry insiders and it probably cannot help this. Think of the pool from which the government chooses the head and ASIC chooses its staff: the finance industry. Anyone coming into a senior role there is likely to have a background in for-profit finance. Even if they don’t, the mindset is the same.
    And although Shipton’s comments are frustrating they’re pretty unsurprising. Did anyone see the nausea-inducing coverage of him by the AFR when he was picked? From elite Melbourne university colleges to investment banking, in a nutshell. Hardly someone who’s going to be advocating for anything against the interests of the industry when he’s never known anything different.

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