The chief executives of Commonwealth Bank and Westpac are the first of the major bank bosses to be questioned by the House of Representatives standing committee on economics, in the first parliamentary grilling since the start of the banking royal commission.
CBA’s Matt Comyn began by delivering a mea culpa, confessing to failures in judgement, process and leadership, as well as greed — a factor identified by royal commissioner Kenneth Hayne as a driving force behind misconduct, in his damning interim report.
“We’ve been too slow to identify problems, too slow to fix underlying issues and too slow to put things right for customers,” Mr Comyn said in his opening statement to the committee.
“We have underinvested in prevention, even though we have invested significantly in customer remediation — this is completely unacceptable.”
The committee’s deputy chair, Labor MP Matt Thistlethwaite, asked Mr Comyn how the bank allowed its corporate image to become so tarnished.
“Mr Comyn, what happened to the once-mighty Commonwealth Bank?”
“This is an organisation that working people had such trust and confidence in.
“Why was it not the case that the board acted sooner when red flags were there going back ten years around wealth management scandals, around CommInsure, and other practices within the bank?”
Mr Comyn admitted there were many cases where things should have been done differently and pointed to a “seminal” report by the bank regulator APRA, which concluded CBA’s success had dulled its senses.
“Many elements and these failures are inexcusable — we did as an organisation become complacent,” he admitted.
CBA sacks 41 employees for misconduct
Mr Comyn said 41 Commonwealth Bank employees have been sacked for misconduct so far this year, while nine had resigned amid investigations.
He would not confirm that there were further sackings ahead, but said some matters were still being reviewed.
Some of the responses from Mr Comyn and CBA’s chief risk officer David Cohen were met with laughter and heckles from the public gallery, including Mr Comyn’s admission that he had met with less than 10 victims of bank misconduct face to face.
Labor MP Clare O’Neil probed Mr Comyn about his engagement with affected members of the public and asked him to commit to dealing with specific cases she had come across.
On Wednesday, the Australian Banking Association unveiled changes to its code of practice to prevent fees being charged to deceased estates.
“We have an announcement yesterday where there seems to be the expectation of accolades that the banks are saying they will not charge fees to dead people,” said Ms O’Neil, describing “fanfare” around the announcement.
“Commissioner Hayne has made it pretty clear that he thinks this is against the law anyway, so are we really at the point where the code of practice is just saying that the bank needs to follow the law?”
“It shouldn’t be expected for us to reiterate something that should’ve never occurred … I can only think it was designed to ensure there was consistency and confidence about how seriously the industry is taking it,” replied Mr Comyn.
CBA’s David Cohen was grilled by Liberal MP Jason Falinski about his accountability for the bank’s risk arm, in light of the AUSTRAC money laundering scandal, which CBA settled for $700 million earlier this year.
“Under [the new Banking Executive Accountability Regime], if that were to occur again, you would be facing jail time?” he asked.
“I would be one of the people that would be held accountable, yes,” said Mr Cohen.
“And how do you sleep at night knowing that?”
“It’s a significant responsibility and one that we are taking extremely seriously … we have invested hundreds of millions of dollars in systems and in people and better capability of the organisation.”