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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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| Version 4 | Version 5 |
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| Banking inquiry: nobody fired for denying life insurance payouts, Commonwealth boss says – live | Banking inquiry: nobody fired for denying life insurance payouts, Commonwealth boss says – live |
| (35 minutes later) | |
| 6.47am BST | |
| 06:47 | |
| Adam Bandt has had a stoush with Ian Narev about whether CBA wants house prices to stay high so the amount and value of home loans stays high. | |
| Narev replied: | |
| The conditions that are right for Australia in the long term are the conditions that are right for the Commonwealth Bank. We’re not interested in short term distortions. | |
| Bandt notes that 80% of Narev’s pay is contingent, largely on increasing returns to shareholders. He questions whether this leads to a bank structure tailored to writing more housing loans. | |
| Narev replied: | |
| One of the key determinants of everybody’s remuneration is doing the right thing by customers. | |
| He accepts that there is “some component relation to performance” but insists the customers come first. | |
| Updated | |
| at 6.49am BST | |
| 6.41am BST | |
| 06:41 | |
| Bandt has asked whether the banks have passed the cost of the government guarantee scheme onto customers through higher interest rates. | |
| He replied: | |
| There will be a cost to regulation, some of it will be passed on to customers. | |
| But Narev insists some of the cost is also passed on to shareholders, pointing to the fact CBA’s return on equity has dropped from 22.1% in 2007 to 16.5% in 2016. | |
| Updated | |
| at 6.42am BST | |
| 6.36am BST | |
| 06:36 | |
| Greens MP Adam Bandt is doing his questioning by telephone – he is in Melbourne because his wife is about to give birth. | |
| Bandt wants to know whether CBA gets cheaper credit than smaller banks because it is judged to be “too big to fail” and the government will step in and save it if it gets in trouble. | |
| Ian Narev replied: | |
| It’s difficult to judge any assessments global funders are making in relation to future government decisions. | |
| Bandt suggests the International Monetary Fund has put the CBA and big banks’ advantage at 0.2% and Narev doesn’t quibble with the figure. | |
| Updated | |
| at 6.38am BST | |
| 6.27am BST | |
| 06:27 | |
| Liberal MP, Scott Buchholz, is asking about why credit card interest rates are so high. | |
| Ian Narev says credit cards are “high-risk unsecured debt”. | |
| The risks are higher and that flows through into pricing ... This is in some degree the riskiest debt we have. | |
| Asked whether credit card rates strike the right balance in fairness to customers, Narev said: | |
| There are some products that could be a bit more cheap, there are some products that could be a bit more expensive. | |
| He added that customers are advised when a loan might be more appropriate than a credit card debt. | |
| Updated | |
| at 6.29am BST | |
| 6.18am BST | |
| 06:18 | |
| Chief risk officer, David Cohen, has told the committee compensation has been paid to the customers of three CBA financial advisers delisted by the Australian Securities and Investment Commission. | |
| He said customers affected by poor advice are told when advisers are moved off their case before the advisers are actually struck off. | |
| If you want a sense of how common it is for financial planners to lose their registration, here’s a timeline of banking scandals Guardian Australia published in April. | |
| Updated | |
| at 6.21am BST | |
| 6.14am BST | 6.14am BST |
| 06:14 | 06:14 |
| Matt Keogh has asked about the $2.8m of Ian Narev’s pay based on performance. Commonwealth Bank and other companies are under fire for paying executives extra for things that should be core business, such as customer satisfaction. | |
| Narev explains his pay is set by the board and shareholders. | |
| It’s performance-based remuneration – nowhere should it be described as a bonus. | |
| Narev rattles off consumer surveys that show Commonwealth customers are happy with the bank. He said he took a hit on pay because the bank’s response to financial advice controversies was “not good enough”. | |
| Updated | |
| at 6.16am BST | |
| 6.06am BST | 6.06am BST |
| 06:06 | 06:06 |
| Labor MP Matt Keogh starts his questioning by disclosing that he still has his Dollarmite account. | Labor MP Matt Keogh starts his questioning by disclosing that he still has his Dollarmite account. |
| He then asks why Ian Narev has not taken the Ethics Centre banking and finance oath despite the chief executives of the other three big banks signing on. The guts of the oath are: | He then asks why Ian Narev has not taken the Ethics Centre banking and finance oath despite the chief executives of the other three big banks signing on. The guts of the oath are: |
| Narev replied: | Narev replied: |
| I agree completely with the content. | I agree completely with the content. |
| The sole reason I haven’t [sworn the oath] to date is ... my view is that the day I took the job I signed up for that, I made that commitment to all our stakeholders. | The sole reason I haven’t [sworn the oath] to date is ... my view is that the day I took the job I signed up for that, I made that commitment to all our stakeholders. |
| 5.58am BST | 5.58am BST |
| 05:58 | 05:58 |
| And we’re back. | And we’re back. |
| Liberal MP, Julia Banks, is asking about CBA’s risk assessment, and whether it has an alert system where two or more consumer complaints or a report of wrongdoing by a whistleblower will trigger an alert for the chief executive and other senior executives. | Liberal MP, Julia Banks, is asking about CBA’s risk assessment, and whether it has an alert system where two or more consumer complaints or a report of wrongdoing by a whistleblower will trigger an alert for the chief executive and other senior executives. |
| Ian Narev says there is no system where two complaints trigger an alert, and says given the size of the bank it would be “unworkable”. | Ian Narev says there is no system where two complaints trigger an alert, and says given the size of the bank it would be “unworkable”. |
| Narev explains the process it does have: | Narev explains the process it does have: |
| I’ve lost count of the number of times I’ve emphasised escalation. | I’ve lost count of the number of times I’ve emphasised escalation. |
| [In senior executive meetings] We have a specific agenda item for complaints, where we specifically consider patterns in complaints. | [In senior executive meetings] We have a specific agenda item for complaints, where we specifically consider patterns in complaints. |
| The newly created customer advocate inside the bank will provide a further alert, Narev said. He adds he can’t guarantee it would have sped up the time to alert executives of problems such as the definition of heart attacks being used to deny payouts. | The newly created customer advocate inside the bank will provide a further alert, Narev said. He adds he can’t guarantee it would have sped up the time to alert executives of problems such as the definition of heart attacks being used to deny payouts. |
| Chief risk officer, David Cohen, adds that there is a whistleblower hotline. | Chief risk officer, David Cohen, adds that there is a whistleblower hotline. |
| Updated | Updated |
| at 6.03am BST | at 6.03am BST |
| 5.46am BST | 5.46am BST |
| 05:46 | 05:46 |
| Labor’s Pat Conroy is trying to discover just how big the Commonwealth Bank’s returns on home loans and credit cards are. | Labor’s Pat Conroy is trying to discover just how big the Commonwealth Bank’s returns on home loans and credit cards are. |
| Chief executive Ian Narev replied: | Chief executive Ian Narev replied: |
| We don’t disclose the returns on equity by individual products. In highly competitive markets, you don’t want these individual aspects of product profitability disclosed to your competitors. | We don’t disclose the returns on equity by individual products. In highly competitive markets, you don’t want these individual aspects of product profitability disclosed to your competitors. |
| Narev said home loans are just over half the bank’s balance sheet and gives general figures for the performance of the bank: in 2007 the bank’s return on equity was 22.1% and in 2016 it’s 16.5%. | Narev said home loans are just over half the bank’s balance sheet and gives general figures for the performance of the bank: in 2007 the bank’s return on equity was 22.1% and in 2016 it’s 16.5%. |
| Chairman David Coleman reads the rules on refusing to answer a question and notes the committee can determine it still requires an answer which can be provided in private. | Chairman David Coleman reads the rules on refusing to answer a question and notes the committee can determine it still requires an answer which can be provided in private. |
| Narev said he has the “highest respect” for the committee’s ability to ask for information. | Narev said he has the “highest respect” for the committee’s ability to ask for information. |
| We will engage in the way we should engage with the committee, with requests that come through the chair. | We will engage in the way we should engage with the committee, with requests that come through the chair. |
| Conroy labels the committee “a farce” when he’s cut off for lack of time, and the hearing goes to a 10 minute break. | Conroy labels the committee “a farce” when he’s cut off for lack of time, and the hearing goes to a 10 minute break. |
| Updated | Updated |
| at 5.51am BST | at 5.51am BST |
| 5.30am BST | 5.30am BST |
| 05:30 | 05:30 |
| No employment terminations over denying life insurance claims: Narev | 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. | 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. | 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. | 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. | 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. | We’re committed to an environment where if people are accountable, they will be held accountable. |
| Updated | Updated |
| at 5.34am BST | at 5.34am BST |
| 5.19am BST | 5.19am BST |
| 05:19 | 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. | 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. | 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. | They made a conclusion that was mistaken. |
| It was not a customer-friendly process. | It was not a customer-friendly process. |
| Updated | Updated |
| at 5.23am BST | at 5.23am BST |
| 5.14am BST | 5.14am BST |
| 05:14 | 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. | 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. | 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. | 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. | 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 | Updated |
| at 5.16am BST | at 5.16am BST |
| 5.09am BST | 5.09am BST |
| 05:09 | 05:09 |
| Labor wants more time to question CBA chief Ian Narev | 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. | 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. | 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. | 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. | 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. | Narev said the bank needs to take a “through the cycle view” to consider that default rates might rise again in future. |
| Updated | Updated |
| at 5.12am BST | 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 |