Bookmark and Share
Previous article

News Articles

  • Banks to file dirty laundry lists
  • By James Frost and James Eyers
  • 28/01/2018 Make a Comment
  • Contributed by: Rodney ( 3 articles in 2018 )
Click to receive your Free Guide
Commonwealth Bank of Australia will acknowledge failures in its financial planning, mortgage broking and insurance units in a report to the royal commission that is expected to detail fresh cases of misconduct alongside a list of the biggest scandals over the past decade.

CBA, ANZ Banking Group, National Australia Bank and Westpac were given until today to lodge submissions that summarise every instance of misconduct since the financial crisis, as the financial services royal commission rolls into action ahead of its first public hearing in a fortnight.

The embarrassing and potentially damaging documents – which the banks expect to be publicly released once reviewed by the commission – will include case studies explaining how banks were alerted to problems, why they occurred, and how they have been fixed, The Australian Financial Review understands.

Some banks will order the examples of misconduct by business units or by theme. Banks may issue press releases on Monday, but are unlikely to make ASX announcements.

Commissioner Kenneth Hayne wrote to the big banks in December, calling for submissions of no more than 50 pages; the banks have struggled with the concise format specified, given the extent of misconduct at each bank.

Related Quotes
volume 3075419value 209927297.5

Last updated: Wed Jun 13 2018 - 6:34:22 PM
View full quote
ASX Announcements Expand
The commission also asked for not only examples of misconduct but any conduct "which it considers has fallen below community standards and expectations". The banks consider this a subjective and broader benchmark than their pure legal obligations and difficult to interpret, but sources said they were reluctant to leave anything out.

While banks would typically seek to craft submissions or public documents to paint them in a favourable light, in this situation the banks are believed to be adopting a warts-and-all approach for fear of some example of misconduct to emerge in a hearing that was not included into the original document.

Westpac said on Sunday afternoon its submission was still being prepared, while a Commonwealth Bank spokesperson said "the group is providing a consolidated response for all of its business units and subsidiaries, including CommInsure, Colonial First State, Aussie Home Loans, and advice businesses".

In calendar 2017, the big four banks and Macquarie paid out a total of $448 million in penalties, compensation, reimbursements, refunds and remediation for alleged misconduct. This included poor financial advice, overcharging, breaches of the responsible lending laws, allegations of both contravening market integrity rules and engaging in cartel conduct.

Bank legal and public affairs teams are prepared to deal with any fallout from the release of the reports from today. However, the commission has not indicated when they will be made public. "The information provided by individuals and entities may be published by the commission during its proceedings or in its reports. This will be a matter for the commission," a spokesperson for the commission said.

The letter of introduction and two pages of questions sent by Mr Hayne in December, seen by The Australian Financial Review, asks the banks to explain the "nature, extent and effect of that conduct, practice, behaviour or activity".

It is not known how many banks, super funds, or insurers received the letter, although it has been sent to the largest players in each sector. The commission would not confirm how far it has cast its net.

"The commission has written to a range of entities in the banking, superannuation and financial services sectors as well as consumer advocates and regulatory bodies. The commission will not be commenting further on the number or nature of those requests," the spokesperson said.

The summer holidays of dozens of lawyers working for the banks was cut short as they scrambled to compile the lists. Banks had no existing reporting systems holding the information around misconduct, so the information had to be extracted from various files across the businesses.

Each of the major banks has established special royal commission teams to which staff have been seconded. The teams are expected to grow as the commission gathers momentum. The teams are typically being steered by committees comprising senior executives, including the CEOs.

Mr Hayne's letter calls for each bank to explain, for each incident of misconduct, whether it believed it related to the "culture or governance practices of the entity", or to "some broader cultural or governance practices in the industry or sector of the industry".

The commission also wants to know if the misconduct "results from other practices including risk management, recruitment or remuneration practices" and the steps that have been taken to "remedy the consequences for consumer or other businesses" and to "prevent [its] recurrence".


    (Note: If wrong - comments will not be posted)

    1Will not be visible to public.
    2Receive notification of other comments posted for this article. To cease notification after having posted click here.
    3To make a link clickable in the comments box enclose in link tags - ie.<link>Link</link>.

    To further have your say, head to our forum Click Here

    To contribute a news article Click Here

    To view or contribute a Quote Click Here

    Hosting & Support by WebPal© 2019 All rights reserved.