Aussie Bank Bosses Should Be Named Over Breaches: LawmakersBy
‘Unacceptable’ that no senior executives fired over scandals
Big four bank CEOs called before committee last month
Executives at Australia’s biggest banks must be held publicly accountable for any regulatory breach in any of their divisions, according to a parliamentary committee investigating the conduct of the lenders after a series of scandals.
From July next year, the banks should be required to report publicly the nature of any breach and the names of senior executives responsible for the teams where the breach occurred, according to a report from the House of Representatives Standing Committee on Economics released Thursday. The lenders should also reveal “consequences” for those executives and, if they weren’t fired, why termination was not pursued, it said.
The recommendations come after the heads of Commonwealth Bank of Australia and its three largest rivals were called before the committee last month by Prime Minister Malcolm Turnbull amid rising public disquiet over record profits, the failure of the lenders to pass on recent interest-rate cuts in full and a series of consumer scandals.
“The major banks have a ‘poor compliance culture’ and have repeatedly failed to protect the interests of consumers,” the lawmakers said. “This is a culture that senior executives have created. It is a culture that they need to be held accountable for.”
It was “unacceptable” that no senior figures had been fired in a number of scandals such as the mishandling of life insurance claims at CommInsure, Commonwealth Bank’s insurance arm, the improper collection of fees from 390,000 accounts at Australia & New Zealand Banking Group Ltd. and the provision of poor financial advice at National Australia Bank Ltd., the report said.
Steven Münchenberg, chief executive of the Australian Bankers’ Association, said in a statement that the industry will examine the committee’s proposals and await the government’s response.
“Many of the committee’s recommendations build upon reforms already underway to make banking better for all Australians,” Münchenberg said. “We support these changes.”
Representatives for Commonwealth Bank and ANZ said they were reviewing details in the report, while a NAB spokeswoman said the lender was “strongly committed” to lifting industry standards.
The parliamentary committee could play a “constructive role in building on industry reforms that are currently being implemented,” a Westpac Banking Corp. spokesman said, adding that the bank “may not agree with all aspects of the report.” He didn’t elaborate.
The four banks should be required to engage an independent third party to undertake a full review of their risk-management procedures and to make recommendations on how they identify and respond to misconduct, according to the parliamentary report.
Lawmakers also threw their weight behind calls for the establishment of a new complaints tribunal -- paid for by the industry -- and the creation of a sharing framework for data on consumers and small businesses.
The big four banks dominate domestic lending and the parliamentarians said they were concerned that the oligopoly has “significant adverse consequences” for the Australian economy and consumers. Antitrust regulators should establish a team to make recommendations every six months on measures to boost competition, they said.