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Version 9 Version 10
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
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4.55am BST
04:55
Chief executive Brian Hartzer said that Westpac has unconscious bias training for the top four layers of its management and will “continue to look at everything we can from the customer interface point of view to make sure women are very welcome”.
MP Julia Banks suggests the tribunal could mandate ethics and unconscious bias training to “provide benefits to consumers ... and ensure all employees across the bank are appropriately trained”.
Hartzer has concerns with “more prescriptive regulation”.
The more you prescribe what the bank does the more there are unintended consequences that have to be thought through carefully.
4.50am BST
04:50
Liberal MP Julia Banks has asked about a bank tribunal and has added the details that it would be “under the auspices of Asic” and have “strong interventionist powers” to set benchmarks on sales.
It’s interesting that none of the MPs have said explicitly that the tribunal’s role would be to grant compensation, as Liberal MP Warren Entsch has advocated.
Westpac chief Brian Hartzer says first, the bank tries to ensure customers don’t complain; second, it has a process to deal with complaints internally; then third, it is introducing an external customer advocate.
There may be occasions that people say they’re still not happy. It’s entirely appropriate to look at that appeal framework. I don’t have a strong view about whether that’s a tribunal or something else.
4.32am BST
04:32
Concept of passing on RBA rate cuts is "inaccurate": Westpac chief
Matt Thistlethwaite asks about “rockets and feathers” - the theory that banks jack up rates quicker than they take them down in reaction to cash rate changes. He suggests Westpac is “the worst at passing on” rate cuts.
In August 2016, Westpac took 20 days to reduce its rates. Thistlethwaite suggests this netted Westpac $28.2m in profit
Westpac chief Brian Hartzer said mortgages are funded by a mix of long term savings from term deposits and offshore borrowing from bonds, not just the cash rate.
If this was causing a significant distortion in our margins then you would see it in the net interest margin of the bank - and as I said in my opening statement our net interest margin has been coming down over time.
The concept of “passing on” a cash rate reduction is “essentially an inaccurate statement”, he said.
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4.25am BST
04:25
MP Matt Thistlethwaite said personal bankers have goals of two insurance sales a week, two home loan referrals, two wealth referrals, one BT or life insurance protection sale and other targets.
Westpac chief Brian Hartzer replied:
You’re referring there to a personal banker whose job is to have conversations with customers all day...
Out of that we expect we would find opportunities - for mortgages, for insurance. We know for a fact most Australians are under-insured.
He said referrals arise out of consideration of customers’ needs and products recommended are in the best interests of customers.
The numbers are the measure of an expectation about what an employee having “high quality conversations” will achieve.
Asked why the bank doesn’t wait for customers to ask for the products if they need them, Hartzer suggests some are “in denial”, “confused” or don’t have good financial literacy.
We do not condone selling products to people that they don’t need ... We have made clear that is not what we are asking employees to do.
4.14am BST4.14am BST
04:1404:14
Brian Hartzer says Westpac “probably sources some external data sources” when asked if it uses information from third parties to sell products to its customers, but their own transaction history is the most valuable source when considering their banking needs.Brian Hartzer says Westpac “probably sources some external data sources” when asked if it uses information from third parties to sell products to its customers, but their own transaction history is the most valuable source when considering their banking needs.
He said Westpac spotting a transaction to pay off a credit card with a competitor and offering that customer a credit card would be a good example of “healthy competition”.He said Westpac spotting a transaction to pay off a credit card with a competitor and offering that customer a credit card would be a good example of “healthy competition”.
Customers can tick a box to opt out of such offers, he said.Customers can tick a box to opt out of such offers, he said.
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4.09am BST4.09am BST
04:0904:09
Westpac chief Brian Hartzer said that bonuses for performance are less than 5% of a personal banker’s income and less than 2% for a teller. Westpac chief Brian Hartzer said in the parts of the business that still have performance pay that bonuses for performance are less than 5% of a personal banker’s income and less than 2% for a teller.
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4.03am BST4.03am BST
04:0304:03
Matt Thistlethwaite has asked about refunds by Westpac of $9.2m in bank fees and $22m in credit card transaction fees.Matt Thistlethwaite has asked about refunds by Westpac of $9.2m in bank fees and $22m in credit card transaction fees.
The chief executive says a large number of accounts were affected, including failing to give 150,000 students a waiver on fees and charging 800,000 accounts foreign transaction fees when they shopped on overseas websites.The chief executive says a large number of accounts were affected, including failing to give 150,000 students a waiver on fees and charging 800,000 accounts foreign transaction fees when they shopped on overseas websites.
3.58am BST3.58am BST
03:5803:58
Financial planner bodycount at Westpac is 22 in the last 6 yearsFinancial planner bodycount at Westpac is 22 in the last 6 years
Westpac chief executive, Brian Hartzer, said that in the last six years 22 financial planners have been referred to Asic and all of them are no longer at the bank after being sacked or resigning.Westpac chief executive, Brian Hartzer, said that in the last six years 22 financial planners have been referred to Asic and all of them are no longer at the bank after being sacked or resigning.
Hartzer said the bank audits all the files of planners referred to Asic, notifies all their clients and makes redress where appropriate.Hartzer said the bank audits all the files of planners referred to Asic, notifies all their clients and makes redress where appropriate.
3.54am BST3.54am BST
03:5403:54
The Westpac chief executive says mortgages that track cash rate moves “appear attractive” and nothing stops them being offered. But rate-tracker mortgages are “fraught with risk” when the cost of funds spikes and a bank is not allowed to reprice its interest rates.The Westpac chief executive says mortgages that track cash rate moves “appear attractive” and nothing stops them being offered. But rate-tracker mortgages are “fraught with risk” when the cost of funds spikes and a bank is not allowed to reprice its interest rates.
Quizzed as to why banks in other markets offer them but not Australia, Hartzer says that other markets like the UK have deeper domestic capital markets and rely less on global funds to provide mortgages.Quizzed as to why banks in other markets offer them but not Australia, Hartzer says that other markets like the UK have deeper domestic capital markets and rely less on global funds to provide mortgages.
3.43am BST3.43am BST
03:4303:43
Westpac chief executive, Brian Hartzer, tells the committee it wrote submissions to the Productivity Commission in favour of data portability to enhance competition.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.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 BST3.41am BST
03:4103:41
What are the odds?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..@Westpac CFO Peter King having a rough start before House Economics Committee. He's shown up wearing the same tie as chair @DavidColemanMP.
Who wore it best? House Economics Committee chair David Coleman and Westpac CFO Peter King. #auspol pic.twitter.com/5yGovU8JasWho wore it best? House Economics Committee chair David Coleman and Westpac CFO Peter King. #auspol pic.twitter.com/5yGovU8Jas
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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.
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2.54am BST
02:54
NAB 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.
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:
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2.34am BST
02:34
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.
Stay with us as we summarise this morning’s hearing and scoop up further reaction.
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2.29am BST
02:29
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.
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.
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2.24am BST
02:24
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”:
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?
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 BST
02:18
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:
Another CEO welcomes LNP alternative to #BankRC but can a consumer disputes tribunal deal with systemic/cultural issues? #questionsforbanks
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2.13am BST
02:13
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:
We would welcome with government and other parties to enhance that process.
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