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Banking inquiry: 'To be clean' – NAB explains decision to ditch political donations – live Banking inquiry: 'To be clean' – NAB explains decision to ditch political donations – live
(35 minutes later)
3.43am BST
03:43
Westpac chief executive, Brian Hartzer, tells the committee it wrote submissions to the Productivity Commission in favour of data portability to enhance competition.
He declines to take a free kick offered to him by David Coleman about why the other big four banks resisted the idea.
3.41am BST
03:41
What are the odds?
.@Westpac CFO Peter King having a rough start before House Economics Committee. He's shown up wearing the same tie as chair @DavidColemanMP.
3.38am BST
03:38
Committee chairman David Coleman said Westpac subsidiary Capital Finance Australia was required to pay $500,000 for breaches of consumer credit protection law. The financier failed to send out warning letters about repossession of cars.
It appears we’ve hit our first operational error. Westpac chief executive Brian Hartzer said:
That was purely and simply an operational error ... there was a break down in the collections practices of a business we acquired.
There have been consequences, the chief executive of that business is no longer with us.
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3.33am BST
03:33
Westpac chief executive Brian Hartzer has explained a refund it gave for charging customers a life insurance premium on a policy that was purchased at the same time as a loan.
Hartzer said consumers had continued to get the benefit of the policies, but there was “a potential for confusion” about whether premiums would continue after the loan had been paid back. The bank agreed to a refund.
3.26am BST
03:26
Westpac boss apologises for "operational errors" and "trust gap"
Westpac boss, Brian Hartzer, and the chief financial officer, Peter King are up now.
Hartzer’s opening statement notes that banks worldwide have to hold more capital, and he therefore blames global conditions for the price of its loans.
Westpac’s return on investment has fallen “significantly” from more than 20% to 14%, he said. Profits are not “excessive” but banks need “strong balance sheets” when parts of the economy get in trouble, he said.
Because of a “trust gap” that had opened up between the community and banks, Hartzer apologises for “operational errors”. He tables a document he says shows Westpac weeded out two planners then banned by Asic.
The chief executive boasts Westpac was the first to remove sales as a component of base pay, and has shifted metrics for tellers’ performance towards service rather than sales.
3.18am BST
03:18
Labor’s Matt Thistlethwaite has been on Sky News and argued it was inappropriate for NAB to buy data from credit reporting company VEDA about when its customers approached other banks for a loan.
Something I didn’t appreciate from this morning’s hearings is that this was more extensive than NAB simply looking at its own data to recommend products to its customers.
In response to questions this morning NAB chief executive, Andrew Thorburn, said the bank would “cease immediately” if a customer indicated they did not consent to up-selling of that nature.
It raises the question how a customer who would know to opt out if the bank had looked at their data or found out from a third party like VEDA.
2.54am BST2.54am BST
02:5402:54
NAB chief executive has rougher ride on accountability questionsNAB chief executive has rougher ride on accountability questions
After the third day of hearings it’s become apparent the committee has sharpened its questions about banks’ failure to stamp out misconduct.After the third day of hearings it’s become apparent the committee has sharpened its questions about banks’ failure to stamp out misconduct.
The NAB’s chief executive, Andrew Thorburn, has answered no less satisfactorily than his CBA and ANZ counterparts on Tuesday and Wednesday but has faced a slightly tougher grilling.The NAB’s chief executive, Andrew Thorburn, has answered no less satisfactorily than his CBA and ANZ counterparts on Tuesday and Wednesday but has faced a slightly tougher grilling.
What we’ve learned this morning:What we’ve learned this morning:
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at 3.02am BSTat 3.02am BST
2.34am BST2.34am BST
02:3402:34
That concludes NAB’s evidence.That concludes NAB’s evidence.
Liberal chairman of the House of Representatives standing committee on economics, David Coleman, has suspended the hearing until 1.15pm AEDT when Westpac execs will give evidence.Liberal chairman of the House of Representatives standing committee on economics, David Coleman, has suspended the hearing until 1.15pm AEDT when Westpac execs will give evidence.
Stay with us as we summarise this morning’s hearing and scoop up further reaction.Stay with us as we summarise this morning’s hearing and scoop up further reaction.
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at 2.57am BSTat 2.57am BST
2.29am BST2.29am BST
02:2902:29
The deputy chairman, Matt Thistlethwaite, has asked about Asic action against NAB over alleged manipulation of the bank bill swap rate and why the bank hasn’t accepted liability and enforceable undertakings.The deputy chairman, Matt Thistlethwaite, has asked about Asic action against NAB over alleged manipulation of the bank bill swap rate and why the bank hasn’t accepted liability and enforceable undertakings.
NAB’s chief executive, Andrew Thorburn, said the bank had reviewed what happened and rejects Asic’s allegation.NAB’s chief executive, Andrew Thorburn, said the bank had reviewed what happened and rejects Asic’s allegation.
We have a disagreement with Asic and now it’s going through legal proceedings to resolve it.We have a disagreement with Asic and now it’s going through legal proceedings to resolve it.
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at 2.57am BSTat 2.57am BST
2.24am BST2.24am BST
02:2402:24
The opposition leader, Bill Shorten, has weighed into the bank hearings at a press conference in Broadmeadows.The opposition leader, Bill Shorten, has weighed into the bank hearings at a press conference in Broadmeadows.
He said the chief executives are offering “ritual” apologies but want to return to “business as usual”:He said the chief executives are offering “ritual” apologies but want to return to “business as usual”:
I think it’s pretty telling. Malcolm Turnbull and the big four banks want at the end of this week to go back to business as usual ...I think it’s pretty telling. Malcolm Turnbull and the big four banks want at the end of this week to go back to business as usual ...
If all of these bank see CEOs keep saying we stuffed up, we got it wrong, we have caused problems for our customers, haven’t they just made the final argument in favour of a banking royal commission?If all of these bank see CEOs keep saying we stuffed up, we got it wrong, we have caused problems for our customers, haven’t they just made the final argument in favour of a banking royal commission?
Sorry doesn’t cut it. Nothing less than a royal commission cuts it. Malcolm Turnbull’s got to stop protecting the banks. Listen to the people of Australia, Malcolm, give the people of Australia what they want, which is a royal commission to improve our banking sector.Sorry doesn’t cut it. Nothing less than a royal commission cuts it. Malcolm Turnbull’s got to stop protecting the banks. Listen to the people of Australia, Malcolm, give the people of Australia what they want, which is a royal commission to improve our banking sector.
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2.18am BST2.18am BST
02:1802:18
The Finance Sector Union’s acting national secretary, Geoff Derrick, notes that three of the four major banks so far have backed the backbench MP proposal for a banking tribunal:The Finance Sector Union’s acting national secretary, Geoff Derrick, notes that three of the four major banks so far have backed the backbench MP proposal for a banking tribunal:
Another CEO welcomes LNP alternative to #BankRC but can a consumer disputes tribunal deal with systemic/cultural issues? #questionsforbanksAnother CEO welcomes LNP alternative to #BankRC but can a consumer disputes tribunal deal with systemic/cultural issues? #questionsforbanks
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at 2.55am BSTat 2.55am BST
2.13am BST2.13am BST
02:1302:13
Andrew Thorburn is crowing that just 700 complaints about NAB went to the financial ombudsman last year, down 64%.Andrew Thorburn is crowing that just 700 complaints about NAB went to the financial ombudsman last year, down 64%.
He accepts that it is difficult for small businesses to go to the supreme court to litigate disputes, and again suggests NAB is open to a simpler process:He accepts that it is difficult for small businesses to go to the supreme court to litigate disputes, and again suggests NAB is open to a simpler process:
We would welcome with government and other parties to enhance that process.We would welcome with government and other parties to enhance that process.
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2.11am BST
02:11
NAB’s chief executive, Andrew Thorburn, is defending small business loan rates of up to 15% for unsecured loans and as low as 5.59% for residentially secured loans.
As has been discussed in previous hearings, small business loans are risky because many small businesses fail. Nothing to see here.
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2.08am BST
02:08
MP Craig Kelly is asking about late fees on credit cards.
NAB’s chief operating officer, Antony Cahill, says the late fee is a flat $9 and he believes that’s lower than the other banks. Happy days.
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2.06am BST
02:06
Asked a very global question about why the committee is holding hearings into the banks, NAB chief Andrew Thorburn suggests it’s mainly about educating the public.
He cites the discussion around home mortgage rates, and the fact a “long term conversation” had allowed facts to “breathe”, specifically, that banks don’t fund mortgages solely off the cash rate.
Thorburn: First time I've been able to have a 3 hour discussion about my profession
2.02am BST
02:02
Nationals MP Kevin Hogan asks about the increased spread between the cash rate and standard mortgage rate.
NAB executives deny it is due to decreased competition in the mortgage market, and point to increased funding costs separate to the cash rate such as attracting global funds.
1.56am BST
01:56
Adam Bandt asks if banks are “inherently conflicted” because their wealth management arms want to make money at the expense of depositors, and whether investment needs to be separated from retail banking.
The NAB’s chief executive, Andrew Thorburn, rejects the view that structural separation is required because financial planners don’t just recommend NAB products and the bank has a separate consumer advocate function.
Our planners have a best interests duty of care to their clients ... that they get the proper advice.
Asked if he’d be prepared to see that duty reflected in legislation such as restoring it to the future of financial advice law, Thorburn said it was good that the duty was “codified”, including in the Ethics Centre banking and finance oath.
But I do think the moves to lift the expectations of planners in recent years are important.
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1.44am BST
01:44
'To be clean': NAB chief explains decision to ditch donations
NAB’s chief executive, Andrew Thorburn, explains that the bank gave political donations “as part of involvement in wider democratic process” but the board decided to ditch them in May.
Asked by the Greens MP Adam Bandt why it stopped, Thorburn says:
It comes back to wanting to be respected as a bank and a company. And make sure that our customers don’t see a conflict.
In essence we felt the donations we were making to political parties were being misconstrued and misinterpreted incorrectly. We felt to be clean, direct and decisive we decided to stop such political payments at the state, local and federal government levels.
Thorburn acknowledged the perception that banks had made donations to receive “particular benefits”.
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1.40am BST
01:40
The Liberal MP Scott Buchholz has asked if NAB has an appetite to decrease credit card rates and “if so when, and by how much”.
On Wednesday Buchholz celebrated ANZ saying it would consider a restructure of credit card interest rates. Today, he wants a more specific commitment.
NAB’s Andrew Thorburn says: “Very few people are paying the highest rate and if they are it is attached to a premium product.” He concedes credit cards are profitable, but says they are getting less so with a halving of margins over the past 20 years.
It’s a very extensive, easy to switch, competitive market.
The bank’s chief operating officer, Antony Cahill, says the interest rates are reasonable. He notes the cash rate is only 20% of the cost of cards and customers don’t pay the headline rate owing to interest-free periods and other complications.
Buchholz is now quoting Wil Anderson, the host of The Gruen Transfer, to establish that banks would be very popular if they dropped credit card rates. He doesn’t get the commitment to restructure rates.
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1.24am BST
01:24
Thorburn rejects strengthening individual accountability for executives
Matt Keogh has returned to the fact that no senior executives were sacked after 43 financial planners lost their jobs for breaches of the code of conduct. He asks about the UK’s new laws requiring individual accountability of executives.
Andrew Thorburn says it’s understandable given that there were bank collapses and public bailouts in the UK that they have “more specific and onerous requirements”.
The Australian financial systems inquiry “basically concluded that our industry is strong”, he said.
We should note that scheme ... But we have a good record, good checks and balances. Our banks have high capital ratios, and are unquestionably strong. I’m not saying we should be complacent, but transferring a scheme designed to solve a very different problem would not be wise.
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1.15am BST
01:15
Addressing the concept of a housing bubble, NAB’s chief executive, Andrew Thorburn, says the problem exists only in Sydney and Melbourne.
He explains that the bank doesn’t lend too much to individual customers because it checks they can afford to pay back principal and interest, and have a buffer for movements in rates.
NAB’s average loan-to-value ratio is about 44% and just a few per cent of customers are able to borrow more than 90% of the value of their asset.
The bank’s chief operating officer, Antony Cahill, says less than 2% of the total housing book is in inner-city postcodes, rebutting the idea it might be exposed to oversupply of apartments.
Updated
at 2.46am BST
1.05am BST
01:05
Labor’s Matt Keogh is asking about how much it costs to run an ATM network, which is a line of questioning we haven’t seen so far on the first two days of hearings.
He asks how much an ATM transaction costs, and how much it costs for the customer of another bank to use it. NAB execs have taken the questions on notice.
Keogh attempts to land the punch by asking why NAB increased the “foreign transaction charge” from $1.50 to $2 in 2013.
NAB’s chief operating officer, Antony Cahill, suggests the costs are reasonable and competitive. ATM use is down across Australia, so revenue is also down, he said.
Customers of other institutions have access to their ATMs.