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'Nobody wants to be the Catholic Church at a royal commission': bank sins laid bare

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As the banking royal commission starts rolling out examples of bad behaviour, many of the bankers and their lawyers are working hard to make sure they are not on the wrong side of history.

“Every royal commission needs a Catholic Church and nobody wants to be the Catholic Church in a royal commission,” a source recently told Fairfax Media, referencing the devastating findings of the recent royal commission into institutional responses to child abuse.

(The same could be said for the Victorian bushfires royal commission – nobody wanted to be the electricity company whose faulty wires caused such devastation.)

“But there’s one bank that looks like it wants to be the Catholic Church,” the lawyer said.

It was clear that day as it was on Tuesday that bank is the Commonwealth Bank.

At the second public hearing in Melbourne, the CBA came in for a major lashing from counsel assisting the commission, Rowena Orr, QC, over the quality of its submissions to the royal commission.


In December, the royal commission asked CBA and 40 other financial institutions to hand up a 50-page submission to the inquiry detailing all instances of misconduct or conduct falling below community standards over the past 10 years – basically a rap sheet of all the banks’ bad behaviour over a decade.

Some banks, especially the big four, delivered submissions that were incredibly light on detail and as a result they were asked to make a second submission.

Most banks did better at outlining their sins in their second submission. All banks bar one that is.Instead, the CBA flooded the offices of the royal commission with reams of spreadsheets detailing all possible, probable and suspected misconduct.

If the bank’s point was to say to Commissioner Kenneth Hayne “look we’re so riddled with bad behaviour we can’t surmise it” they did a pretty good job.

CBA was also given a kicking by Orr for first telling the royal commission there were no instances of misconduct or poor conduct at the country’s largest mortgage broker, the CBA-owned Aussie Home Loans, when there were in fact 17 instances of poor conduct at the broker. It followed a failed attempt by the bank to have large portions of its evidence suppressed.

But the focus of the royal commission soon turned to the alleged misconduct of NAB bankers through its ‘introducer’ mortgage sales referral program.

NAB head of broker partnerships Anthony Waldron sparked the ire of Commissioner Kenneth Hayne when he described a serious allegation of fraud as a “breakdown of controls” within the bank.

It was there that Hayne delivered a “soliloquy” and a bit of a dressing down to a snappily attired NAB executive that went to the heart of the type of banking speak used to deflect responsibility away from the bank.

"One thing that I may have to look at, I think, is what the attitude of the industry... is to the notion of obedience to the law - the obedience to the law that governs the way they conduct their affairs.

“There may be a difference between a "breakdown of controls" and an acknowledgement of breach of law.

"Treat that as the soliloquy that it undoubtedly is, Mr Waldron, and deal with it as you wish. But I don’t want people to ignore the fact that these are ideas that are at least on the table."