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Commonwealth Bank boss predicts more 'poor customer outcomes' – live Commonwealth Bank boss predicts more 'poor customer outcomes' – live
(35 minutes later)
5.01am BST
05:01
Matt Thistlethwaite has asked about performance targets and league tables of the financial performance of CBA branches.
Ian Narev replies that financial results are “an input” into assessing branch performance, but they are more dependent on the overall performance of the economy.
Asked if individuals would be performance managed as a result of financial results, Narev replied:
There’s no direct link between a branch performing above level X or below level Y and any consequence at the branch or individual level.”
4.55am BST
04:55
Labor’s Matt Thistlethwaite has asked about the Commonwealth Bank’s insurance division and why it took CommInsure’s former chief medical officer, Dr Benjamin Koh, blowing the whistle to discover allegations that doctors were asked to change their assessments to deny claims.
Narev said the bank has a “very, very different view from the former chief medical officer about the substantive issues of assessment of claims”.
Chief risk officer, David Cohen, said Koh’s claims were being investigated by the chief risk officer and chief legal officer when Koh went to Four Corners with the claims.
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04:46
Gareth Hutchens
As Ian Narev faces questions about his bank’s financial planning scandal, the Reserve Bank has kept the official cash rate unchanged at 1.5%.
The new RBA governor, Phil Lowe, says inflation remains “quite low” and he expects it to remain low for some time.
He’s listed the reasons:
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Narev gives an update on the financial advice review program, which has looked at 10 years of complaints. He said the review found 800 cases of poor advice out of hundreds of thousands who had received advice in that time.
The figure is just 10% of the people who applied to have their advice reviewed, Narev said, correcting Labor’s Matt Thistlethwaite who construed the figure as 10% of all consumers receiving poor advice.
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04:41
The chairman of the committee has raised the concept of a one-stop banking tribunal to allow consumers to pursue redress in an environment more simple than a court as Liberal MP Warren Entsch has called for.
Ian Narev said the Commonwealth Bank is “very open” to discussions about the tribunal.
We’re for any work that can be done that allows customers to be heard.
Narev said he wanted such a body to be cost-efficient and the architecture to be very clear. He accepted that the “industry would have a role in funding it” and said introduction of a new tribunal would need to clarify what happens to existing avenues for redress.
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04:33
The third topic is interest rates. Chairman David Coleman has asked why Commonwealth Bank doesn’t offer interest rates that track the increases and decreases of changes in the official cash rate.
Ian Narev replies:
The Reserve Bank cash rate is an important benchmark but a large number of funding costs exist irrespective of that benchmark. If we were to provide such a product, we would need to take into account all potential factors on the costs of funds.
He gives as an example new regulations in the US which come into effect next week and which he says will “materially change” the amount and price of short term borrowing.
Coleman foreshadows the committee may recommend banks be forced to provide interest rates that track the official rate, which would prevent banks refusing to pass on rate cuts.
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4.24am BST4.24am BST
04:2404:24
The second question from chairman, David Coleman, is about financial advice.The second question from chairman, David Coleman, is about financial advice.
Ian Narev concedes: “We did not act with the requisite speed … on financial advice matters.”Ian Narev concedes: “We did not act with the requisite speed … on financial advice matters.”
The Commonwealth Bank chief executive said the bank had already paid out $52m in the first round of remediation for poor financial advice, and has made a further $11m of payouts.The Commonwealth Bank chief executive said the bank had already paid out $52m in the first round of remediation for poor financial advice, and has made a further $11m of payouts.
4.22am BST4.22am BST
04:2204:22
The first question is about CommInsure. Narev said that after criticism of the definition of heart attacks being used to deny customers payouts, 17 customers received a payout using a fairer definition applied retrospectively.The first question is about CommInsure. Narev said that after criticism of the definition of heart attacks being used to deny customers payouts, 17 customers received a payout using a fairer definition applied retrospectively.
4.18am BST4.18am BST
04:1804:18
Narev predicts more cases of poor customer outcomes and compensationNarev predicts more cases of poor customer outcomes and compensation
The only two witnesses at the committee table are Commonwealth Bank chief executive, Ian Narev, and chief risk officer, David Cohen.The only two witnesses at the committee table are Commonwealth Bank chief executive, Ian Narev, and chief risk officer, David Cohen.
Ian Narev has delivered an opening statement that the bank comes to the hearings in the “spirit of openness”. Narev has delivered an opening statement that the bank comes to the hearings in the “spirit of openness”.
The chief executive said that banking regulation is about balancing “strength and fairness”. “You cannot have a prosperous economy unless banks are strong,” he warned. The chief executive said banking regulation is about balancing “strength and fairness”. “You cannot have a prosperous economy unless banks are strong,” he warned.
Narev said banks have to balance the demands of borrowers and businesses who want cheap credit, depositors who want higher returns, and returns for shareholders.Narev said banks have to balance the demands of borrowers and businesses who want cheap credit, depositors who want higher returns, and returns for shareholders.
He foreshadows that the two main concerns of the committee will be bank profitability and “the unequal power between banks and their customers”.He foreshadows that the two main concerns of the committee will be bank profitability and “the unequal power between banks and their customers”.
I have personally met with customers we have let down ... I have said before how sorry we are for the pain we’ve caused them, and I say so again today.I have personally met with customers we have let down ... I have said before how sorry we are for the pain we’ve caused them, and I say so again today.
Narev paints problems as arising from a combination of human error and defective processes and promises to make changes to the root causes of problems.Narev paints problems as arising from a combination of human error and defective processes and promises to make changes to the root causes of problems.
As we do this work I expect there will be cases of more poor customer outcomes. And there will undoubtedly be more announcements of compensation due to customers, which will include some significant monetary amounts... As we do this work I expect there will be cases of more poor customer outcomes. And there will undoubtedly be more announcements of compensation due to customers, which will include some significant monetary amounts ...
Critics will paint these as signs of ongoing problems, actually they’re signs of how serious we are about fairness.Critics will paint these as signs of ongoing problems, actually they’re signs of how serious we are about fairness.
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The committee hearing has just kicked off, for those who’d like to watch along a live stream is available. Chairman David Coleman has just rattled off the committee’s terms of references and is just going through house rules now. The committee hearing has just kicked off, for those who’d like to watch along a live stream is available. Chairman David Coleman has just rattled off the committee’s terms of references and is going through house rules now.
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The director of policy and campaigns at the Consumer Action Law Centre, Denise Boyd, has told ABC24 the committee hearings are unlikely to make calls for a royal commission go away but “if the CEOs of the big banks … are being asked some searching questions about their policies and practices, within their businesses, that’s got to be a good thing for all Australians”.The director of policy and campaigns at the Consumer Action Law Centre, Denise Boyd, has told ABC24 the committee hearings are unlikely to make calls for a royal commission go away but “if the CEOs of the big banks … are being asked some searching questions about their policies and practices, within their businesses, that’s got to be a good thing for all Australians”.
Boyd said she wants the committee to examine credit cards because half of the Consumer Action Law Centre’s clients face credit card debts of more than $10,000Boyd said she wants the committee to examine credit cards because half of the Consumer Action Law Centre’s clients face credit card debts of more than $10,000
There are really high interest rates that apply for those when interest rates in Australia are at record lows so we’d like to know how the banks justify charging those high rates.There are really high interest rates that apply for those when interest rates in Australia are at record lows so we’d like to know how the banks justify charging those high rates.
There is a duty of care. Everybody has got their own personal responsibility but for a bunch of reasons, people do fall into difficult circumstances and by the time they have racked up … more than $10,000 worth of debt, that is a long way back.There is a duty of care. Everybody has got their own personal responsibility but for a bunch of reasons, people do fall into difficult circumstances and by the time they have racked up … more than $10,000 worth of debt, that is a long way back.
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Before the action kicks off at 2pm AEDT, you’ll want to know who is on the house committee on economics. It consists of six government MPs, three from Labor and Greens MP Adam Bandt. Its chair is the Liberal Party’s David Coleman, the deputy chair is Labor’s Matt Thistlethwaite.Before the action kicks off at 2pm AEDT, you’ll want to know who is on the house committee on economics. It consists of six government MPs, three from Labor and Greens MP Adam Bandt. Its chair is the Liberal Party’s David Coleman, the deputy chair is Labor’s Matt Thistlethwaite.
One government MP on the committee, Craig Kelly, is an outspoken critic of excessive credit card late fees which he has labelled a “plain rip-off”. Kelly has also expressed support for a proposal put forward by MP Warren Entsch calling for bank victims to be compensated by a special tribunal rather than set up a royal commission that can’t grant compensation. One government MP on the committee, Craig Kelly, is an outspoken critic of excessive credit card late fees which he has labelled a “plain rip-off”. Kelly has also expressed support for a proposal from MP Warren Entsch calling for bank victims to be compensated by a special tribunal rather than set up a royal commission that can’t grant compensation.
The other MPs on the committee are: Liberals Julia Banks, Scott Buchholz and Trevor Evans; The Nationals’ Kevin Hogan; and Labor’s Pat Conroy and Matt Keogh.The other MPs on the committee are: Liberals Julia Banks, Scott Buchholz and Trevor Evans; The Nationals’ Kevin Hogan; and Labor’s Pat Conroy and Matt Keogh.
I’ll bring you a list of Commonwealth Bank witnesses when we have it.I’ll bring you a list of Commonwealth Bank witnesses when we have it.
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3.32am BST3.32am BST
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Hello and welcome to our live blog on the first day of parliamentary committee hearings into the big four banks. Tuesday’s hearing will focus on the Commonwealth Bank, followed by ANZ on Wednesday and then NAB and Westpac on Thursday.Hello and welcome to our live blog on the first day of parliamentary committee hearings into the big four banks. Tuesday’s hearing will focus on the Commonwealth Bank, followed by ANZ on Wednesday and then NAB and Westpac on Thursday.
In August, Malcolm Turnbull announced the new review mechanism in response to Labor pressure for a royal commission into banks. The House of Representatives Standing Committee on Economics will hear from the big four at least once a year.In August, Malcolm Turnbull announced the new review mechanism in response to Labor pressure for a royal commission into banks. The House of Representatives Standing Committee on Economics will hear from the big four at least once a year.
Its terms of reference include quizzing the banks on their decisions about whether to pass on interest rate cuts, as well as how they plan to enhance consumer protections. That will be where Labor wants the main action, as it’s a juicy opportunity to raise allegations of rate rigging and claims insurers systematically delayed payouts to sick and dying customers. Its terms of reference include questioning the banks on their decisions about whether to pass on interest rate cuts, as well as how they plan to enhance consumer protections. That will be where Labor wants the main action, as it’s a juicy opportunity to raise allegations of rate rigging and claims insurers systematically delayed payouts to sick and dying customers.
Opposition frontbencher Matt Thistlethwaite, deputy chair of the committee, has indicated he will ask about industry scandals, credit card interest rates and commissions that encourage staff to push customers into products that may not be right for them.Opposition frontbencher Matt Thistlethwaite, deputy chair of the committee, has indicated he will ask about industry scandals, credit card interest rates and commissions that encourage staff to push customers into products that may not be right for them.
After calling for a bank royal commission in April, Labor has indicated it will continue to push for a fuller inquiry. The government points to the new accountability mechanism and powers for the Australian Securities and Investment Commission as sufficient to regulate the banks.After calling for a bank royal commission in April, Labor has indicated it will continue to push for a fuller inquiry. The government points to the new accountability mechanism and powers for the Australian Securities and Investment Commission as sufficient to regulate the banks.
Let’s see whether Commonwealth Bank chief executive, Ian Narev, and other executives can convince the committee the industry is well-regulated or whether the hearings add to calls for a royal commission.Let’s see whether Commonwealth Bank chief executive, Ian Narev, and other executives can convince the committee the industry is well-regulated or whether the hearings add to calls for a royal commission.
Comments for the live blog are open - so please contribute your take on proceedings below. You can contact me on Twitter @Paul_Karp. Comments for the live blog are open – so please contribute your take on proceedings below. You can contact me on Twitter @Paul_Karp.
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