ANZ Bank CEO Shayne Elliott appeared in Canberra today before the House of Representatives Economics Standing Committee.
Here is the full text of his opening statement:
Good afternoon and thank you for the opportunity to appear before you again.
- Actions taken since our last meeting;
- Our views on policy issues, including the Committee’s recommendations;
- Our own work on rebuilding trust; and
- How we can improve accountability.
This review’s intent to improve the system for all Australians rightly focuses on mistakes made in the past and how we must do better.
At the same time we should also recognise and respect the strength of the system this country has built over decades of reform, and of the investment and innovation by banks themselves.
Our system has largely balanced the needs of customers, the government and our owners, who, for the most part, are everyday Australians through their superannuation.
But we know we need to do better.
We have, at times, let down our customers and we are not proud of this.
I and the 50,000 very good people I lead at ANZ are committed to fixing problems of the past, putting things right and ensuring we are a fairer bank that consistently meets community expectations.
This is not idle talk and I hope we have the opportunity today to demonstrate that.
We have been banking Australians for 185 years. Much has changed but not the importance of trust, integrity and character.
Millions of Australians trust us with their savings and their future and we have helped millions own their home, or start and grow their business.
I know you have many questions so I will limit my opening remarks to a few key points:
On credit cards, you asked us to consider lowering rates. We have done this by putting real money back in the hands of over half a million ANZ customers.
On writing to clients of banned advisors, we have done this and will always do it.
We also looked hard at launching tracker mortgages.
Our research showed only 10% of variable rate customers would think about switching to a tracker.
In part, this reflects price. We cannot fund the bank with tracker deposits and this risk needs to be priced for.
Launching trackers would therefore be commercially unattractive, and make us more complex. That said, we will continue to assess demand.
On open data, we support change and see opportunity for our customers and ANZ, but our primary focus is protecting our customers’ privacy and security.
Data is powerful. Allowing customers easier access to their own data will help them make better choices.
But data is also dangerous in the wrong hands.
Even today, 25% of all bank fraud attempts target customer’s data, as opposed to their money.
For almost 200 years, we have protected and moved customers’ money. Each day, we act on five million customer instructions and move 200 billion dollars for them.
We do so with incredible levels of accuracy and safety because the industry has worked with regulators to define rules and standards, and invested heavily in security.
We have an obligation, and a business opportunity, to provide the same levels of protection when moving our customers’ data.
Many companies, like the world’s largest technology firms, see our customers’ data as a valuable resource.
Australia will need to consider how data access can occur safely without exposing Australians to unreasonable risk, and seed local innovation and jobs rather than see all the benefits go offshore.
That needs time, coordinated investment and cooperation between industry and government.
In terms of change, there is a wave of Government and industry reforms that will benefit Australians, including my industry’s six point plan.
These include the Sedgwick Review, the Ramsay Review, the Carnell Review and the review of the Code of Banking Practice.
We agree with most of the recommendations made to date, and are already making changes.
For example, we do not pay tellers direct sales commissions and our new pay schemes further increase the focus on customer service.
We also support a number of the recommendations from this Committee’s initial report.
In particular, we agree with you that reviews of competition within the banking sector can add value.
We believe that the market is already highly competitive and serving customers well.
For example, small banks are growing their share of the market faster than large banks.
Banking is a low margin business because of competition and that’s good for customers.
For example, competitive discounts on mortgages mean we make only 67 cents for every $100 we lend.
Across Australia’s Big Four, the difference between the rate paid to depositors and lenders, and the rate charged to borrowers, has fallen consistently over 20 years and, today, it is half of what it was.
We are also making our own changes.
We have appointed the former Australian Commonwealth Ombudsman Colin Neave as ANZ’s Customer Fairness Advisor.
Reporting to me and the Board, he is working alongside our Customer Advocate, a position we have had for 14 years.
Colin is helping establish Remediation Principles so that we have consistent standards for when things go wrong.
He will also be reviewing our core retail products to ensure they operate fairly and transparently.
Finally, some comments on accountability.
I understand the community’s desire for greater executive accountability and I agree we should do more.
We have strong policies that set high standards for executives. Holding ourselves – including me – to account for actions that affects customers is important.
Even when abiding by the law, people make mistakes, violate our code of conduct or act with negligence.
We hold these people to account, through their compensation, promotion prospects and, ultimately, their future with the company.
We believe this Committee’s proposal to increase the level of public disclosure when things go wrong can largely be implemented.
However, we think connecting individual accountability with breach reporting needs more consideration.
Parliaments, governments and regulators make public policy not banks, but as an experienced business manager, I can offer my own observations on the risks of the proposed change.
In more than 20 years of managerial roles, it is my experience that overly punitive sanctions, like the risk of public shaming, can lead to a culture of fear.
A culture of fear saps the courage of even good people to own up to their mistakes and call out when they see the mistakes of others.
We have intelligent and decent people at ANZ, and we want them to focus on using innovation for the benefit of customers, not looking over their shoulder worried that an innocent mistake can cost them their reputation.
Balancing customer outcomes with executive accountability needs considerable thought. In this spirit, we have offered a suggestion in our letter to you on how this could practically be achieved.
Thank you for your attention. I now invite your questions
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