- Catherine Livingstone, the chair of the Commonwealth Bank, was today questioned in the financial services royal commission.
- She is the most senior figure from a major bank to appear before the royal commission.
- She described as “damning” a series of scandals involving the Commonwealth.
Commonwealth chair Catherine Livingstone, the most senior figure from a major bank to appear before the financial services royal commission, described as “damning” a series of scandals involving the bank.
Rowena Orr, senior counsel assisting the commission, asked Livingstone if she had any observations about those events, including a series of enforceable undertakings with corporate regulator ASIC and the appointment of an independent reviewer to monitor CBA’s compliance with remedial action.
“I think it’s a fairly damning chronology,” she said after Orr had listed the bank’s scandals.
The Commonwealth has been hit by a series of scandals involving many parts of Australia’s biggest bank, including charging dead people for services not provided, withholding payouts for insurance using outdated medical definitions, and massive breaches of anti-money-laundering laws.
An inquiry by bank regulator APRA found that a failure of culture was behind the scandals, with prevailing group think believing the bank was well run, and that learning from experiences and mistakes was ignored.
Livingstone was also asked about the inquiry findings by APRA which resulted in $1 billion being added to CBA’s minimum capital requirement.
Orr: “What are the practical consequences for CBA of a $1 billion increased capital requirement?”
Livingstone: “Well, literally, that you have to hold that additional capital and that, effectively, reduces your profitability.”
She was surprised when she joined the board in 2016 to find directors asking few questions of the management team.
“I was quite surprised by the the lack of challenge,” she said.
Livingstone agreed it was “fair to say” the board did not take the anti-money laundering issues seriously enough and that the board’s audit committee did not give sufficient attention to non-financial risks.
The board and audit committee had relied on management assurances about the AUSTRAC queries on money-laundering.
She has since worked to improve governance, had replaced the CEO and management team, and ensured the board was properly informed by management.
The company now had a clear code of conduct, she said.
“I want to see that our code of conduct is lived and that people are actually disciplined through the policy environment so they understand what it is they have to do and their duties,” she said.
NAB Chair Ken Henry and Bendigo Bank chair Robert Johanson are confirmed as being due to appear.
CBA’s Matt Comyn was the first of the four big bank CEOs to appear at the royal commission.