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ANZ - CBA at odds over whether to name and shame senior executives

Mario Christodoulou, Sarah Danckert

Published: March 7 2017 - 4:36PM

A major split has emerged between Australia's biggest banks over a push to publicly list bad behaving executives after ANZ Bank declaring it was in favour of the proposal as rivals at the Commonwealth Bank and National Australia Bank spoke out against it.

Public reporting of serious breaches is a key recommendation from the Parliamentary inquiry into the banking sector. A register of such breaches list the nature of the breach of the Corporations Act, the executive in charge of the division and how the bank has remedied the problem.

On Tuesday, CBA chief executive Ian Narev told the House of Representatives' standing committee holding a review of Australia's four major banks that such a register would not be appropriate as it may have unintended consequences including naming people who may not have had a role in the breach occurring.

"I don't believe naming would add anything to accountability," Mr Narev said.

"If a customer wants to know the name of the executive in charge of the division, that's something they can easily find out."

Last week National Australia Bank chief Andrew Thorburn said his bank would also not in support of the public reporting of breaches of the Corporations Act.

ANZ breaks ranks

Australia's financial institutions have a responsibility to report significant breaches of the Corporations Act to the corporate watchdog, the Australian Securities and Investments Commission (ASIC), but the breaches remain secret from regular consumers until ASIC finishes its investigation which can take a matter of years.

ANZ chief executive Shayne Elliott said the bank was "broadly supportive" of public reporting of breaches.

"The name of the executive in charge of the division is hardly secret," Mr Elliott said.

"When people misbehave we should be open about it."

Mr Elliott said that ANZ was only cautious of the proposal that breaches be made public in a matter of days, suggesting a 30 day period might be a fairer timeframe for the bank.

He also said listing what the bank had done to rectify the problem could be difficult to detail quickly if the bank was still investigating a particular breach.

Committee chair David Coleman welcomed Mr Elliott's support of the public reporting of bad bank behaviour, criticising the other banks that did not support the proposal.

"It's an improvement of your competitors' response to this recommendation. They have responded very strongly, I think inappropriately so," Coleman said.

"Would it surprise you that your competitors have taken a hard line?" Mr Coleman asked Mr Elliott.

Mr Elliott said he was not able to speak for his competitors but reiterated his support for the principle of the proposal. 

'No consequences'

Mr Narev earlier told the Committee the bank was working to build the trust of its customers after a string of scandals that no senior executive had been removed following scandals in the bank's life insurance and financial advice business and said he did not believe senior executives who oversaw serious scandals should be named on a register.

"[Scandals in] Comminsure, wealth management, rate rigging  - there were no consequences for senior executives?" Mr Coleman asked.

"Correct," Mr Narev responded.

Mr Coleman pressed Mr Narev on whether senior executives should be named and held responsible publicly for serious breaches following serious licence breaches. Mr Narev said he consider it more "appropriate" to include consequences for executives in the bank's annual remuneration report.

Mr Coleman said the issue with this approach is that "generally there aren't any consequences so it will be a very short report."

Mr Narev however said senior executives shouldn't be singled out before an investigation had taken place.

"We support accountability, what I would say is that our executives are entitled to the same due process as anybody would have." he said.

"I don't want ot be in a position to do is have to name people who may or may not have had any particular role ex officio."

Royal commission 'unnecessary'

Prime Minister Malcolm Turnbull announced the committee hearings in August after the major bank's failed to pass on the Reserve Bank's 0.25 per cent interest rate cut to mortgage holders in full and amid calls from Labor for a royal commission following a string of banking scandals. 

Mr Narev on Tuesday said a royal commission was unnecessary because banks had to be seen as "unquestionably strong".

Mr Thistlethwaite pointed out there were more than 20 investigations into the banking sector and asked whether it would be better to have a single royal commission.

But Mr Narev said it would damage the industry.

"The message that convening of a royal commission [would send] … would not be positive for the industry would not be positive for strength," he said.

Mr Thistlethwaite responded that the banks had themselves undermined confidence in the sector.

"You guys have done a pretty good job in destroying confidence in the banking industry over the last decade," he said.

Public support for a banking royal commission remains strong at 64 per cent, according to a Newspoll last month.

The committee has been hearing evidence from the chief of executives of Australia's big-four banks as part of a government effort to increase accountability for the sector. This is the second time Mr Narev has faced the parliament's economics committee as part of this initiative, following a three-hour grilling in October.

 

This story was found at: http://www.canberratimes.com.au/content/adaptive/canberratimes/business/banking-and-finance/cba-boss-ian-narev-admits-no-senior-execs-have-been-dismissed-after-scandals-20170306-gus328.html