Former Westpac CEO Brian Hartzer
Former Westpac CEO Brian Hartzer (Image: AAP/Lukas Coch)

Before the Hayne royal commission into the financial services industry, we heard a lot about bank culture.

As scandal after scandal emerged, and ever more flagrant cases of misconduct were made public, the prudential regulator APRA began talking about focusing its regulatory effort more on culture.

By 2015, corporate regulator ASIC and the Reserve Bank were also talking about banking culture.

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In 2016, a full-blown culture war erupted, with former Commonwealth Bank CEO and banking inquiry chair David Murray attacking regulators for going off on a “culture tangent” and comparing cultural regulation to Hitler.

As Crikey noted in 2017, the focus on culture achieved little: banks were continuing to engage in the most egregious misconduct despite years of regulatory focus, talkfests, and commitments to do better. And that was before the royal commission, and before an independent report that shredded the Commonwealth Bank’s culture.

The Westpac money laundering scandal, in which Australia’s oldest bank was revealed as the financial institution of choice for paedophiles, suggests that, in 2019, banking culture is still as rotten as ever.

Earlier this year, the bank released a self-assessment report of its own culture, which it had handed to APRA last November. It found, inter alia, “there were a common set of behaviours across the Group, including: a lack of clarity on accountability and consequences; and, at times, Westpac was too slow to identify, prioritise, escalate and remediate issues”.

At its interim results presentation in May, Westpac claimed to have already commenced “a two year program overseen by the Board” to address its cultural problems, which included enhanced reporting of key risks to the board and executives, and efforts to “strengthen ‘Speak up’ culture, including adoption of a single whistle-blower approach across the Group, increase clarity of accountability and reduce collective decision making.”

By July, Westpac was claiming “around 20% of the recommendations have been implemented” from the culture review. In September, it was 33%. It’s supposed to be 50% by year-end.

But Westpac had been allegedly fixing its culture before that. In July last year, then-CEO Brian Hartzer claimed “more recently we have emphasised the need for a culture where people challenge decisions or processes that don’t seem right, and are empowered to fix things on the spot. We constantly encourage our people to speak up, and every single employee has the ability to raise suggestions or concerns with me directly through email or our internal social network”.

In October 2017, Hartzer told parliament’s economics committee that the “most important area of focus for us is culture — embedding a strong service ethos and behaving in ways that earn and retain trust.”

The reality would prove to be very different. Hartzer has now been dumped, the chairman is on the way out and another director as well, for millions of breaches of money laundering laws and a failure to effectively respond to AUSTRAC’s warnings about paedophiles using its systems. They didn’t go willingly, but had to be forced out by big investors who couldn’t stomach what had been revealed.

Another glimpse of the reality was afforded today by Amanda Wood, the former Westpac executive who oversaw money laundering compliance, in an interview with the Financial Review. Wood was moved out of her job after she alerted Westpac to the seriousness of its breaches — news that wasn’t welcome at senior levels.

How does Wood describe Westpac’s culture, one in which, according to Hartzer, executives “constantly encourage our people to speak up”?

“The thing that drives Westpac and the problem at the bank,” Wood says, “is the people at the top are driven by status, power and money and they don’t understand that the obligations have a social purpose … the attitude in the bank is: ‘how do I avoid blame?’ not ‘how do I fix it?’ Because if the blame is attached to me, my status and money is going to be impacted by that.”

According to Wood, “the response was at least partially about: ‘how we get ourselves out of this? How do we deflect attention from it?'”

After years of regulatory focus on culture and debate about how to improve it, and years of Westpac blithely asserting that culture was important and it was working to improve it, it seems nothing has changed.

This is one culture war where no one on any side has won anything at all.

What needs to be done to improve banking culture? Send your thoughts to Please include your full name for publication.

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Peter Fray
Peter Fray
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