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You can find the current article at its original source at https://www.theguardian.com/australia-news/live/2016/oct/04/commonwealth-bank-boss-appears-before-parliamentary-committee-live
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| Bank hearings: nobody fired for denying life insurance payouts, Commonwealth boss says – live | |
| (35 minutes later) | |
| 5.30am BST | |
| 05:30 | |
| No employment terminations over denying life insurance claims: Narev | |
| Labor’s Pat Conroy has asked about whether there have been any disciplinary consequences for CommInsure claims officers for rejecting insurance claims from terminally ill people or refusal to pay out on life insurance. | |
| Ian Narev replied there have been disciplinary outcomes, but no terminations of employment. | |
| There are certainly individuals where we know enough about them that they’ve had some consequences related to remuneration but at this stage we have not had individuals terminated because of this because we’ve not seen the need to do that. | |
| Narev said the bank had to “finish the work and make sure the consequences are dealt with as part of that”. After reviews are completed, independent committees within the bank will decide on disciplinary action. | |
| We’re committed to an environment where if people are accountable, they will be held accountable. | |
| Updated | |
| at 5.34am BST | |
| 5.19am BST | |
| 05:19 | |
| Labor MP, Pat Conroy, has asked about an ABC report that CommInsure ignored the findings of police and the coroner to refuse a payout for a woman who died of an accidental prescription drug overdose because it decided she had taken her own life. | |
| Ian Narev said it hadn’t been established that the claims officer had wilfully ignored the coroner’s finding. | |
| They made a conclusion that was mistaken. | |
| It was not a customer-friendly process. | |
| Updated | |
| at 5.23am BST | |
| 5.14am BST | |
| 05:14 | |
| Liberal MP Craig Kelly and chief risk officer, David Cohen, have been going back and forth over the interest rates businesses pay on loans. | |
| Cohen explains the bank has repriced risk so it’s not as simple as saying that defaults have gone down since the global financial crisis so rates should have dropped more. | |
| During the GFC the banks got it wrong, we weren’t pricing for risk appropriately. | |
| The reason [the margin on loans] is higher is the risk we have learned to price for. Around 40% of new businesses fail in the first couple of years. That risk was not priced appropriately previously. | |
| Updated | |
| at 5.16am BST | |
| 5.09am BST | |
| 05:09 | |
| Labor wants more time to question CBA chief Ian Narev | |
| Labor’s Matt Thistlethwaite has concluded questioning but rattles off several topics he didn’t get round to, including the review of Commonwealth Bank financial advice and Future of Financial Advice reforms. | |
| Are you willing to come back? I simply don’t have enough time: I have two days worth of questions to ask on behalf of the Australian people. | |
| Ian Narev, replies that he has appeared as requested and he is happy to leave the issue of whether a further hearing is required to the chairman, Liberal David Coleman. | |
| Liberal MP Craig Kelly is now asking about defaults on debt and has established there have been fewer since 2010. It’s a set up for a question about why business lending interest rates haven’t dropped more if default rates are low. | |
| Narev said the bank needs to take a “through the cycle view” to consider that default rates might rise again in future. | |
| Updated | |
| at 5.12am BST | |
| 5.01am BST | 5.01am BST |
| 05:01 | 05:01 |
| Matt Thistlethwaite has asked about performance targets and league tables of the financial performance of CBA branches. | 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. | 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: | 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.” | 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 | 4.55am BST |
| 04:55 | 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. | 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”. | 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. | 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. |
| Updated | Updated |
| at 5.04am BST | at 5.04am BST |
| 4.46am BST | 4.46am BST |
| 04:46 | 04:46 |
| Gareth Hutchens | 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%. | 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. | 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: | He’s listed the reasons: |
| Updated | Updated |
| at 4.52am BST | at 4.52am BST |
| 4.45am BST | 4.45am BST |
| 04:45 | 04:45 |
| 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. | 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. | 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. |
| Updated | Updated |
| at 4.50am BST | at 4.50am BST |
| 4.41am BST | 4.41am BST |
| 04:41 | 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. | 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. | 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. | 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. | 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. |
| Updated | Updated |
| at 4.48am BST | at 4.48am BST |
| 4.33am BST | 4.33am BST |
| 04:33 | 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. | 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: | 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. | 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. | 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. | 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. |
| Updated | Updated |
| at 4.44am BST | at 4.44am BST |
| 4.24am BST | 4.24am BST |
| 04:24 | 04:24 |
| 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 BST | 4.22am BST |
| 04:22 | 04:22 |
| 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 BST | 4.18am BST |
| 04:18 | 04:18 |
| Narev predicts more cases of poor customer outcomes and compensation | Narev 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. |
| 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 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. |
| Updated | Updated |
| at 4.36am BST | at 4.36am BST |
| 4.01am BST | 4.01am BST |
| 04:01 | 04:01 |
| 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. | 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. |
| Updated | Updated |
| at 4.35am BST | at 4.35am BST |
| 3.56am BST | 3.56am BST |
| 03:56 | 03:56 |
| 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 $10,000 | 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 $10,000 |
| 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. |
| 3.46am BST | 3.46am BST |
| 03:46 | 03:46 |
| 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 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. | 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. |
| Updated | Updated |
| at 4.33am BST | at 4.33am BST |
| 3.32am BST | 3.32am BST |
| 03:32 | 03:32 |
| 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 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. | 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. |
| Updated | Updated |
| at 4.32am BST | at 4.32am BST |