- Commonwealth Bank executives had known the bank was failing its customers.
- Some managers felt “vindicated and relieved” when they read the APRA report into the bank’s culture.
- The financial services royal commission told the banks today it was not looking for more apologies.
Many Commonwealth executives had been warning of the bank’s failings long before prudential regulator APRA found that culture was behind a series of scandals which have eroded trust in Australia’s biggest bank.
The financial services royal commission read a series of letters from senior bank staff saying the bank had not listened enough to customers.
One manager said her team felt “vindicated and relieved” when they read the APRA report.
Mark Worthington, an bank internal auditor, wrote: “Frankly there is not much in the APRA report that audit has not said before, but perhaps we need to improve in the area of articulating our views.”
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, and breaches of anti-money-laundering laws.
An inquiry by 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.
CBA chief executive Matt Comyn had sent a hard copy of the APRA report to his 500 most senior executives, asking for feedback.
They all responded.
Comyn said one insight was that there was too much of a focus on “collaboration which had unfortunately become a real weakness” inside the bank.
He said the bank didn’t have a clear understanding of its duties to customers.
And that there was “a culture of us not learning from issues of misconduct in the past”.
“That’s why I said we get into a period of ongoing remediation without fundamentally understanding the root cause in each of those matters,” he said.
The commission told the banks today it didn’t want to hear more apologies about their bad behaviour.
“The purpose of this round of hearings is not to hear further apologies or expressions of regret,” Rowena Orr, senior counsel assisting, told the royal commission hearing in Sydney today.
She said this won’t help commissioner Kenneth Hayne’s understanding of the issues.
“These hearings are focused on seeking to understand two things: the first is what caused the conduct that has been examined. Put simply — why did these things happen?
“Was it because of particular practices of financial services entities such as their risk management, recruitment or remuneration practices?
“Was it because of the culture … ? Or their governance practices?
“The second thing we are seeking to understand is what can be done to prevent misconduct in the future?”
The commission has not released a witness for this seventh round of hearings.
However, NAB Chair Ken Henry, Commonwealth Chair Catherine Livingstone and Bendigo Bank chair Robert Johanson are confirmed as being due to appear, as are the CEOs of all big four banks.
The hearings are focusing on the causes of misconduct and on possible responses, including regulatory reform.
They will also consider the role of regulators ASIC and APRA in supervising the actions of financial services entities, deterring misconduct, and taking action when needed.
Commissioner Hayne, in his interim report, says “greed” and the pursuit of short term profit at the expense of basic standards of honesty was the primary motivator for bad behaviour in the banking industry.