The key themes emerging from three days of Canberra politicians questioning Australia’s big bank CEOs are fairness and the perception of excesses.
The issues ranged from interest rates to credit card fees, unjustly withheld insurance payouts, dodgy financial planners, and whether senior executives take responsibility for any missteps, or if they don’t, why are they being paid so much?
It was the big banks, who last year posted a combined profit of $30 billion, versus the average person on the street.
Westpac CEO Brian Hartzer confirmed that he gets more than $5 million in base pay and incentives, while his bank’s tellers have an average annual take home pay of $50,000.
Between them, the Commonwealth Bank, ANZ, NAB and Westpac touch everyone in Australia via savings accounts, home loans, credit cards, insurance, superannuation, financial advice and taxes paid to government.
The Commonwealth’s Ian Narev came under attack over his bank’s “unethical behaviour”, while Shayne Elliott at the ANZ agreed that there’s been some appalling behaviour by a few at his bank after it was accused of having a “blokey” culture.
Then there are the incentives offered bank staff for “selling” customers products. The politicians wanted to know whether people were getting what they needed or whether they were just helping a bank staff member make their annual incentive targets. The committee did not take submissions from customers, and the CEOs were stout in their defence of their practices.
And the other major focal point – indeed the whole reason prime minister Malcolm Turnbull hauled the financial bosses before parliament – was why banks take so long to bring down interest rates when they move so quickly raise them. There was no real answer to that, or the fact that the banks don’t pass on all the cuts made to official rates by the Reserve Bank of Australia.
In fact the banks don’t like the term “pass on” — they say it’s a matter at looking at the entire cost of funding loans and that official rates are just one part of that.
The committee MPs are still pursuing this issue, asking questions in writing which the banks are compelled, by law, to answer.
Bank bashing back in season and is clearly not over yet, especially on the Opposition side.
The banks have been under pressure from all sides of politics, with the ALP calling for a royal commission and the Turnbull government responding by establishing this annual review of bank operations under scrutiny of the parliamentary committee.
The banks were widely criticised last month for only passing on about half the 0.25% cut in cash rates to 1.5%. The banks instead also increased some rates on deposits.
They have also been hit by a series of scandals including faulty financial planning advice to customers, restricting payouts for disability insurance claims and allegations of rigging the bank bill swap rate (the Commonwealth is excluded from this one).
But their strategy to dealing with the issues at stake was largely the same as they appeared before the House of Representatives economics committee. All four CEOs, in their opening addresses, admitted to the past shortcomings in their organisation, apologised and promised to do better.
The statements annoyed some MPs.
Julia Banks, Liberal, said to Elliott at the ANZ: “Do you think as a CEO who earns millions of dollars, it’s OK to answer questions here by saying, ‘‘Yes, we made a mistake, we fixed it and I apologise’. How many times can you say that? Do you think that’s adequate?”
Elliott replied: “I think that’s the reality of large organisations, that when things go wrong our responsibility is to fix them and make sure they don’t happen again and make sure our customers are treated respectfully. But the reality is that most things don’t go wrong and that most of our customers are satisfied with the bank.”
And Andrew Thorburn at the NAB came under intense questioning over the fact that none of his senior executives had been sacked while 43 financial planners had been dismissed for misconduct.
Many of the committee’s asked questions about corporate responsibility, including Greens MP Adam Bandt who pondered why the same people were still running the banks. “We’ve seen scandal after scandal that only come to light when whistleblowers raise it and we find out the same people are still in charge?”
In the middle of the three days of the hearings, the ANZ revealed it was reviewing its political support, in terms of cash donations, after the NAB quietly went about cutting all of its donations, whether in cash or kind.
It probably wasn’t a response the politicians expected or sought.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.