- The financial services royal commission heard how former CBA head Ian Narev rejected a plan to stop selling junk credit card insurance.
- Current CEO of the Commonwealth, Matt Comyn, told the commission of a meeting he had with Narev three years ago.
- Narev told him to calm down when he proposed to stop selling the insurance, according to notes Comyn took at the time.
Commonwealth bank chief executive Matt Comyn says his predecessor Ian Narev rejected a plan to stop selling useless consumer credit insurance to people who couldn’t claim on it.
A bank audit report in 2015 found that 64,000 customers had been sold CreditCard Plus who weren’t eligible to make a claim on some benefits. Many of them didn’t meet employment criteria which meant they couldn’t make a claim.
Comyn was answering questions by Rowena Orr, senior counsel assisting the financial services royal commission, about notes he took of a one-on-one meeting with Narev on May 28, 2015.
“I had a number of topics that I was going to discuss with him in that particular meeting,” Comyn told the commission hearing.
But the key reason for the meeting, when Comyn was head of retail banking services, was to recommend to Narev that the bank stop selling consumer credit insurance products.
“We had, I think, quite a robust discussion during the course of that meeting. And my recommendation to suspend the sales was not agreed with.”
Orr: “This was a product that you were responsible for. How did you feel about agreeing to disagree with the CEO about your recommendation that CBA cease sales of the product?”
Comyn: “I didn’t think it was a satisfactory outcome.”
Orr: “Did you take the matter to the board at that point?”
Comyn: “No, I did not.”
He had many other discussions with Narev, particularly in 2016. He also sent Narev an email in June 2016.
“I genuinely think that he (Narev) thought that the product was still relevant for customers,” Comyn said.
“It wasn’t clear at all that our product was in any way deficient to other products that are available in the in the market.”
Narev and Comyn talked about the profitability of credit card insurance. As the head of retail banking services, Comyn was prepared to lose the revenue from those products.
Narev, according to Comyn’s notes, told him to: “Temper your sense of justice”.
Comyn told the hearing he took that to mean he should calm down.
Orr: “How did you feel about that comment from the CEO at that time?
Comyn: “I suspect I was slightly irritated by it.”
Orr: “What was the sense of justice that you think Mr Narev was asking you to temper, a sense of justice for the customers of CBA?”
Comyn: “No … I was enthusiastically pursuing my argument which I thought was right. And he was telling me to temper it.”
Orr: “To pursue it less enthusiastically?”
He agreed with Orr that the bank’s culture then didn’t prioritise customers.
Commissioner Kenneth Hayne asked whether profitability was what was driving decision-making at the bank at that time.
Comyn: “I don’t think you’re wrong to make that conclusion at that point in time.”
The Commonwealth stopped selling consumer credit insurance in March this year.
The bank set aside $16 million for refunds, including interest, to an estimated 140,000 customers.
The royal commission is in its seventh and final round of hearings with the CEOs, and some of the chairs, of the big four banks are due to appear.
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.