Westpac Chairman Lindsay Maxsted today outlined why the bank changed its mind about having a Royal Commission into the financial sector.
He says the deterioration of the banking industry’s reputation has been a great disappointment.
“It is clear that some of the criticism of the Australian Banks is warranted,” he told shareholders at the AGM.
“There have been times over recent years when the financial services sector has failed to meet customer expectations.
“As a bank, and as an industry, we also underestimated the intensity of community, regulatory and government reaction when these expectations have not been met.”
The major banks have been hit with a series of scandals including billing customers for poor financial planning advice, allegations of fixing the bank bill swap rate, the non payout of insurance claims by deserving customers and the use of smart ATMs by criminal syndicates to launder cash.
The Federal Government announced late last month a Royal Commission into misconduct of Australia’s banks and other financial services entities.
“Given the significant changes that have already taken place or are underway, including as a result of regulatory scrutiny and Government inquiries, Westpac has consistently argued that further inquiries into the sector, including a Royal Commission, are unwarranted,” says Maxsted.
“However we, and the other major Australian banks, formed the view last week that it was in the national interest for the political uncertainty and speculation around potential commissions of inquiry to end and for the Government to establish its own properly constituted Inquiry.
“In this context, it is our hope that, ultimately, the newly announced Royal Commission will play a role in restoring trust, respect and confidence in Australia’s already strong financial system.”
CEO Brain Hartzer says the bank has been reviewing products and services and how it engages with customers.
“The idea is to ensure all of our products and services are aligned to our customers’ interests, while making them simpler, fairer, and more transparent,” he says.
“And, where we uncover an issue that we need to put right, we ensure no customer has been disadvantaged from these past practices.
“This work has already led to a number of important changes and actions. For example we recently announced that a number of customers would be refunded where some benefits of their home loan packages were inadvertently not provided.”
Hartzer says the bank is embracing the Royal Commission as a way to finally draw a line in the sand on calls for inquiries.
“While the inquiry may find issues across the industry, what I hope it will also show, is that in Westpac’s case, we are acting to fix past issues as they arise and are continuing to invest in the quality of service that we deliver to customers,” he says.
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