- The financial services royal commission has moved on to its second big bank CEO, Brian Hartzer of Westpac.
- He was questioned about car loan fraud and Westpac continuing to automatically increase credit card spending limits despite advice from ASIC.
- Hartzer told hearing his bank didn’t necessarily follow the others.
Westpac’s CEO Brian Hartzer told the financial services royal commission his bank didn’t necessarily follow the others and that he was no car dealer.
He was answering questions from Michael Hodge, senior counsel assisting the commission, about a car loan fraud involving a person on Centrelink benefits and Westpac continuing to automatically increase credit card spending limits when the other big banks stopped doing that on the advice of corporate regulator ASIC.
Hodge: “When you consider the two case studies — the credit card limit increase offers and the car loan — both of which involve Westpac taking a particular approach to the responsible lending obligations, does that suggest anything to you about the culture within Westpac in relation to responsible lending?”
Hartzer: “No, I think they’re different issues.”
The bank CEO said the case of the car loan was a sad story of a woman who was desperate to get a car.
Hodge: “When you have to choose between those two possibilities, one of which is doing something in order to make a profit and get the commission, and the other of which is engaging in some sort of fraud or misrepresentation to Westpac out of the goodness of the dealer’s heart, which one do you think is more likely?”
Hartzer: “I couldn’t say. I’m not a car dealer.”
Hodge then called Hartzer’s response “flippant”.
The senior counsel said that Westpac has acknowledged the flex commission model of remuneration carries the risk that some dealers may prefer their own interests to those of consumers.
On continuing to automatically increase credit card spending limits, when other banks stopped, Hartzer agreed that this made Westpac an outlier.
“We don’t have to agree with all the other banks all the time,” Hartzer said.
However, he said the bank should have have engaged differently with corporate regulator ASIC which in 2013 recommended stopping increasing credit card limits.
“It concerns me that we didn’t engage with the regulator when that point of view was pointed out, and that, to me, is where we clearly went wrong in this case,” said Hartzer.
The royal commission has called all four big bank CEOs to appear during this seventh and final round of hearings.
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