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'I'm just a broken-down old shearer' - CBA faces grilling over CommInsure

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"I'm just a dumb broken-down old shearer," a clearly frustrated Senator John Williams said as he prepared to once again repeat the question: "Did Deloitte speak to customers, yes or no?"

The question, directed to Commonwealth Bank head of wealth management Annabel Spring, was simple enough but it took several attempts before the parliamentary inquiry into life insurance hearing was told "no".

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CBA fronts life insurance inquiry

Amid much criticism and controversy, the CBA's insurance arm CommInsure fronted a Senate life insurance inquiry Friday afternoon.

In that moment CBA reluctantly confessed what Deloitte had already highlighted as a limitation on its work investigating CommInsure – it didn't interview any customers for its report.

The exchange epitomises the various inquiries into the banks, where politicians ask questions of senior executives and the responses either prevaricate, confuse or dodge what is being asked of them.

Ongoing scandal and systemic issues within Australia's big banks have reconfirmed the dire need for a banking royal commission.

It prompted Matt Thistlethwaite, shadow assistant minister for Treasury to issue a statement: "Labor will continue to fight for a banking royal commission because we know that it is the only thing that can deliver the systematic, structural and cultural change that the banking and financial services sector needs."

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CommInsure had pre-empted the parliamentary hearing with the release of Deloitte's "independent" report on Tuesday, which gave it a clean bill of health, saying there was no evidence of systemic issues.

Not surprisingly, it attracted its critics.

Now we have it confirmed (again) that Deloitte didn't speak to customers. Such a simple question shouldn't have chewed up so much time. But it did.

It is a common theme  across inquiries and, as the banking inquiry continues next week, it will be a technique no doubt paraded again, which is why we need a royal commission.

The Deloitte report is important because it makes some sweeping conclusions but they weren't addressed during the inquiry because it ran out of time.

Nor was the treatment of specific individuals discussed. Names were raised but they were not discussed.

I’m just a dumb broken-down old shearer, did Deloitte speak to customers, yes or no?

Senator John Williams

They included heart attack victim James Kessel, who paid a policy for more than 20 years and had his claim knocked back on the basis he didn't meet the definition of a heart attack, despite the bank knowing it was a decade out of date.

The other person was Noel Stevens who had to take the bank to court while he was dying of pancreatic cancer. Days before he died he won the case but CBA appealed it, leaving his grieving daughter to battle the bank again. She won.

Discussing the treatment of individuals gives insights into a culture and better explains what is going wrong. Instead we are left with broad-brushed statements that don't mean a lot when there is no context of how they work in the real world.

One of the issues raised during the hearing was CommInsure's decision not to update its medical definitions of heart attacks and rheumatoid arthritis despite knowing they were out of date.

Click to view interactive

She conceded with the benefit of hindsight it was "poor judgment". Despite this, the bank refuses to backdate the decade-old definition of heart attacks further back than 2014.

Perhaps it might have more food for thought after hearing the testimony of Westpac's wealth arm BT, which said it had updated its heart attack definition back in 2011.

The insurers of the big four banks gave evidence on Friday and the overwhelming message was they aren't perfect, there have been some mistakes.

In his opening statement, MLC Life Insurance boss David Hackett said the sector as a whole has work to do to recover the trust of Australians.

"There are too many incidents where they have been let down."

He is right. The spotlight has been largely on CommInsure but the problems are industry-wide – and not just the banks. Life insurance sold inside super funds has problems, direct insurance is riddled with issues as do some of the life insurers who continue to rake in commissions.

Then there is the issue of independent medical examiners which aren't independent at all but are being increasingly used by some insurance companies to provide the verdict insurers want to hear. The use of these IMEs means claims managers don't have to "lean" on their internal doctors, they can shop for an IME.

It is a sad state of affairs that needs a radical overhaul.

Senator Deborah O'Neill asked the various insurers about the capacity to use customer's data against them and that doctors send full patient files. It is chilling that a claim is lodged and a doctor will send a patient's entire file to the insurer to pick over to possibly find something to reject the claim.

Fallen star

Graeme Cowper suffered a stunning defeat in his defamation action.

Graeme Cowper suffered a stunning defeat in his defamation action. Photo: Nick Moir

Graeme Cowper, the former star planner at NAB who sued Fairfax for defamation then settled before being cross examined, has been a topic of discussion in Parliament this week.

On Thursday he was called a "thug" in the Senate and on Friday he was discussed in the House of Representatives when NAB boss Andrew Thorburn was grilled over the bank's handling of Cowper and his customers.

What has emerged is that of the $25 million in compensation paid to victims of dodgy financial advice at NAB, more than $7 million of that money went to 102 customers of Cowper.

There was a lot of ducking and weaving of questions by Thorburn. It is not hard to see why.

In the defamation case the court heard that NAB filed a breach report with ASIC in 2010 yet allowed him to resign, gave him a glowing letter wishing him "every success in the future" and paid him $185,000.

The bank also signed a side letter, which it refused to hand over during the court proceedings on the basis of confidentiality. To this day we don't know what is in the letter and Thorburn wasn't about to tell the MPs asking for it.

Thorburn said the bank was being more accountable. It has taken action against 1138 staff for breaches of the code of conduct with five senior executives facing action and two being dismissed. This should be commended but the past can't be swept under the carpet, which is what a lot of executives would like to do.

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