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Commonwealth Bank scandal shows why a royal commission into the big four is needed

Date

Mike Carlton

<i>Illustration: Glen Le Lievre</i>

Illustration: Glen Le Lievre

It took far too long, but finally the Commonwealth Bank has been dragged - screaming and kicking all the way - to admit that it ripped off thousands of customers who had sought financial advice over almost a decade.

Not that the bank put it quite like that, of course. Thursday's apology from CBA chief executive Ian Narev was a masterpiece of corporate spin:  "Some people working for our Commonwealth Financial Planning and Financial Wisdom businesses [had]  failed in their primary obligation – to act in the best interests of our customers," he said smoothly.

It was rather more than that.  "Some people" had gouged their clients with ruthless deceit, encouraged by a CBA culture of rapacity and profit-taking above all else.   It was bank robbery, with the bank doing the robbing.  When Fairfax journalists, and later the ABC, began to expose this outrage, the CBA squirmed and fought to avoid the heat even as it pursued many of its victims to bankruptcy and beyond.  

 

Worse,  many of those "some people" are apparently still on the bank's payroll.  Narev made no mention of them being sacked or disciplined.  It's the bad apple theory that's inevitably trotted out by big institutions when this sort of skulduggery is exposed: a small handful of people let us all down, but now we've changed, etc.

To be fair, Narev has now set up what he calls the Open Advice Review Program to compensate the thousands who were screwed.   If it works properly - and that's a big if - the CBA will have to pay out very much more than the paltry $52 million ponied up so far.  The bank can surely afford it:  profit for the six months to last December was up 16 per cent, to $4.2 billion.

But what's really needed is a royal commission into the big four banks, the finance industry at large, and the abject failure of the supposed watchdog, the Australian Securities and Investments Commission, to protect investors.   An explosive report by a Senate committee called for that very thing last week, but the Abbott government brushed it off with the excuse that there's already an inquiry under way.

And indeed there is.  But it's headed by David Murray, who was the CBA's chief executive for 13 years until 2005, when the gouging had already begun.   That's a bit like asking the fox to investigate the blood and feathers in the henhouse.

 

This is not a government minded to upset the big end of town.  The Cormack Foundation, based in Melbourne, is a shadowy fund-raising arm of the Liberal Party, run by the usual Tory bluebloods.   It has substantial share investments in CBA, Westpac, ANZ and the NAB, bringing in big bucks. In its report to the Australian Electoral Commission for 2012-13, the foundation revealed it had paid $1,926,477 in bank share dividends to the Liberals, a nice little earner if ever there was one.     

No wonder Finance Minister Mathias Cormann is keen on FOFA, his so-called Future of Financial Advice "reforms".   If he gets them up it'll be easier than ever for the big four banks to sucker punch their punters. 

With friends like these

The Tories' latest attempt to muzzle the ABC is a blatant political rort, beneath contempt.  Two fierce critics of public broadcasting, the News Corpse columnist Janet Albrechtsen and a former deputy Liberal leader, Neil Brown, have been hoisted onto the panel that recommends appointments to the boards of the ABC and SBS.

Brown is bad enough.  An arch-conservative of the Melbourne establishment, he has frequently called for the ABC to be broken up and sold off. 

But Albrechtsen's elevation is ludicrous.   For heaven's sake, she is on the Murdoch payroll as a columnist at The Australian, where not a day goes by without some demented rant about the wickedness of the ABC and its managing director, Mark Scott.   As the Herald reported this week, Albrechtsen herself has claimed, absurdly, that the ABC is run by a "Soviet-style workers collective".

Or, as she wrote last February: "By ignoring its compact with the Australian people, its owners, as set out in its charter, the ABC risks losing legitimacy as a worthy part of our media and cultural landscape."

Garbage.  Time and again the opinion polls show the ABC is held in high public esteem.  Unlike the Murdoch rags.

Long fall from the palace

That's one kangaroo well and truly tied down, then.  Rolf Harris has been a guest in Her Majesty's palaces many times, and he painted her portrait in 2005.  Now he's off for a longer and less congenial stretch in one of her prisons.   Deedle eedle eedle um.

(That picture, incidentally, has suddenly gone missing. It was commissioned by the BBC, which is now denying all knowledge of its whereabouts. So is the London gallery where the thing was last seen. If anyone knows what's happened to it, they're not saying.  This is a boon for good art.  Like much of Harris' daubing, the portrait was kitsch, a cartoonish travesty.)

Anyway.  I'm glad to see the back of the evil old wobble boarder. That contrived Aussieness was always a toe-curling embarrassment,  especially if you were an Australian living in London and had to endure him cavorting across your TV screen at Royal Command Performances and the like. For his victims, it must have been excruciating.

So much about Harris was fake.   Stone the crows and starve the lizards, Blue. He might have been an Englishman's idea of a dinkum cobber, but in fact he led the life of the Home Counties gentry, with a mansion on the banks of the Thames at the uppercrust village of Bray in Berkshire. I've interviewed him countless times, for radio and television. He was invariably curt, even arrogant, until the on-air light glowed red; then he would throw the levers to matey mode with oily ease.  Lovely to be with you again, Mike...

No more, thank heavens.  All in all, it's been a good week if you enjoy a spectacular fall from grace.   Unlike Harris, Todd Carney was plain stupid, as thick as two planks.  He did not have as far to fall, either, but it was cheering nonetheless. 

smhcarlton@gmail.com    

Twitter: MikeCarlton01

 

321 comments so far

  • Yes Mike, an absolute disgrace. The banks are a law unto themselves and this Government with it's changes to financial planning laws is about to hand them even more power. Of course we need a Royal Commission, problem is the funds are tied up in the Tory's attack on Unions and the Pink Bat saga. Don't hold your breath the Tae Party Tory's are propping up the big end of town, the poor still have to much heavy lifting to do.

    Commenter
    KIDDING
    Date and time
    July 05, 2014, 12:09AM
    • I must be getting soft as I find myself looking forward to Mike Carlton's article each Saturday. Even more strange, I pretty much agree with each point he makes this week. A Royal Commission would clearly be in the national interest and Abbott wasted an opportunity to show some fair mindedness by appointing non-partisan people to the panel that recommends appointments to the boards of the ABC and SBS.

      Commenter
      Flanders
      Date and time
      July 05, 2014, 8:20AM
    • A RC into the CBA - now, THAT may unearth a few inconvenient truths.
      What's good for the goose is good for the gander.

      Commenter
      Howe Synnott
      Location
      Sydney
      Date and time
      July 05, 2014, 8:25AM
    • Hi Flanders

      An RC into the CBA rort must go ahead, however its not with in the ideological perimeters of the LNP, whereas the RCs into the pink batts and Trade unions is.

      Commenter
      Buffalo Bill
      Location
      Sydneys Northshore
      Date and time
      July 05, 2014, 8:44AM
    • "Abbott wasted an opportunity to show some fair mindedness by appointing non-partisan people to the panel that recommends appointments to the boards of the ABC and SBS."

      Flanders,

      OMG! I can't believe it's really you posting that kind of comment (diddily).

      Commenter
      Tristan
      Location
      Melbourne
      Date and time
      July 05, 2014, 8:46AM
    • Well, given Hockey's mother got ripped off, Narev must have donated a lot of money to the NLP to get the FOFA reforms repealed.

      I cannot identify a single action of Abbott that benefits the broader population. If I have missed something, let me know. Every action alienates more and more voters - but he imagines that spinning a few dollars out just before the election will cause everyone to love him.

      But - let's call a spade a spade - Abbott is desperately unlikable. He is a verified liar. He is filled with so much hubris, and obviously has no morals, and his main skill is being a bully. As they say, you can fool some people some of the time ... Abbott has had his pinnacle, and its all downhill.

      The best part is, all the infrastructure created by Gillard can be simply dusted off and re-implemented on Day 2 of the next parliament (Day 1 is absorbed by putting photos of Abbott everywhere so people are reminded of the horror).

      Commenter
      Axis
      Date and time
      July 05, 2014, 9:01AM
    • Flanders please don't go soft on us. As much as I enjoy reading mike I also appreciate the contrary opinion.
      Well have to wait for hacka to wake up.
      +1 Howe
      Quite upset with the CBA. Just shows that greedy arrogant management feel they can get away with rortting their customers and our democracy.

      Commenter
      Tadd
      Date and time
      July 05, 2014, 9:06AM
    • So I guess we can all agree that the LNP proposal to water down Banking Consumer Protections is grotesque on a magnificent scale ....
      Well done LNP proving you are indeed the party who is completely out of touch & void of reality.
      But yes ... I think the 4.2Billion profit for half a year was grossly inadequate & the CBA & other banks need a leg up from the LNP .... scoff cough scorn ...

      Commenter
      Yuppy
      Location
      Yuppy Ville
      Date and time
      July 05, 2014, 9:17AM
    • "Well, given Hockey's mother got ripped off..."

      Hi Axis,

      It was actually Hockey's mother-in-law who was ripped off by a planner.

      Cue mother-in-law joke.

      Commenter
      Tristan
      Location
      Melbourne
      Date and time
      July 05, 2014, 9:20AM
    • Tristan and Tadd - lol. I'll have to try and harden up by Monday. Reminds me of that line from Highlander 'Fight me, damn you'.

      Commenter
      Flanders
      Date and time
      July 05, 2014, 9:35AM

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