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CBA chief defends report that cleared CommInsure without speaking to customers CBA chief defends report that cleared CommInsure without speaking to customers
(35 minutes later)
No customers were interviewed for a report that cleared the Commonwealth Bank’s insurance arm of alleged systemic problems because documents sufficiently told their story, the bank’s chief executive, Ian Narev, has said.No customers were interviewed for a report that cleared the Commonwealth Bank’s insurance arm of alleged systemic problems because documents sufficiently told their story, the bank’s chief executive, Ian Narev, has said.
Appearing at a parliamentary committee hearing into the banks on Tuesday, Narev said he was concerned that some customers had poor experiences but claimed the insurance arm had not failed its customers generally.Appearing at a parliamentary committee hearing into the banks on Tuesday, Narev said he was concerned that some customers had poor experiences but claimed the insurance arm had not failed its customers generally.
Committee members probed a Deloitte report into the CommInsure section, accused of routinely denying legitimate claims from sick and dying customers, for which Narev has already offered a personal apology.Committee members probed a Deloitte report into the CommInsure section, accused of routinely denying legitimate claims from sick and dying customers, for which Narev has already offered a personal apology.
The report, released last week, did not identify any systemic issues relating to historically declined claims, despite the whistleblower and former chief medical officer Benjamin Koh warning that doctors were asked to change their medical assessments.The report, released last week, did not identify any systemic issues relating to historically declined claims, despite the whistleblower and former chief medical officer Benjamin Koh warning that doctors were asked to change their medical assessments.
On Tuesday Narev said that, despite some poor customer outcomes, it was clear from the Deloitte review that “the facts are at odds” with claims made by Koh.On Tuesday Narev said that, despite some poor customer outcomes, it was clear from the Deloitte review that “the facts are at odds” with claims made by Koh.
Narev said that “broader conclusions drawn [about systemic denial of claims] are incorrect”.Narev said that “broader conclusions drawn [about systemic denial of claims] are incorrect”.
The Liberal MP Julia Banks noted that, while the report cleared CommInsure of “wilful misconduct”, it also identified problems including poor staff training and lack of accuracy in reporting that could add to what she characterised as “negligent misconduct”.The Liberal MP Julia Banks noted that, while the report cleared CommInsure of “wilful misconduct”, it also identified problems including poor staff training and lack of accuracy in reporting that could add to what she characterised as “negligent misconduct”.
The committee’s chairman, the Liberal MP David Coleman, probed why CommInsure’s board had a role in designing its terms of reference, which Banks described as “limited”.The committee’s chairman, the Liberal MP David Coleman, probed why CommInsure’s board had a role in designing its terms of reference, which Banks described as “limited”.
Narev responded that the Australian Prudential Regulatory Authority had found the Deloitte report was “robust and independent” and cited Deloitte’s professional reputation.Narev responded that the Australian Prudential Regulatory Authority had found the Deloitte report was “robust and independent” and cited Deloitte’s professional reputation.
Based on the report it was “very unlikely” that any senior executives would be terminated for their management of CommInsure.Based on the report it was “very unlikely” that any senior executives would be terminated for their management of CommInsure.
Narev said that no customers of CommInsure were interviewed as part of the review because Deloitte had “unfettered access” to hundreds and thousands of emails and files, making interviews with customers unnecessary.Narev said that no customers of CommInsure were interviewed as part of the review because Deloitte had “unfettered access” to hundreds and thousands of emails and files, making interviews with customers unnecessary.
Narev refused to reveal how much Deloitte was paid for the report, citing commercial confidentiality. He refused to release two other reviews conducted by Ernst & Young and DLA Piper on the basis staff and employees had been promised confidentiality if they engaged with them.Narev refused to reveal how much Deloitte was paid for the report, citing commercial confidentiality. He refused to release two other reviews conducted by Ernst & Young and DLA Piper on the basis staff and employees had been promised confidentiality if they engaged with them.
With respect to two allegations of rate-rigging in foreign exchange trades between 2008 and 2013, Narev said the CBA had reached a settlement with the Australian Securities and Investment Commission in December.With respect to two allegations of rate-rigging in foreign exchange trades between 2008 and 2013, Narev said the CBA had reached a settlement with the Australian Securities and Investment Commission in December.
Narev said it was “appropriate” that the two individuals involved had been terminated but senior managers should not be held accountable because the breaches didn’t show broader problems with bank processes. Narev said it was “appropriate” for the two individuals involved to have been terminated, and they were no longer with the bank, but senior managers should not be held accountable because the breaches didn’t show broader problems with bank processes.
He said individuals “determined to circumvent” policies was very serious but it was a low level of breach and therefore “not a major financial issue”.He said individuals “determined to circumvent” policies was very serious but it was a low level of breach and therefore “not a major financial issue”.
Coleman asked about the fact that 1,800 of 8,600 financial advice customers whose cases were assessed – about 20% – had received compensation totalling $23m.Coleman asked about the fact that 1,800 of 8,600 financial advice customers whose cases were assessed – about 20% – had received compensation totalling $23m.
Narev said that the review of the bank’s financial advice went back to 2003 and contacted more than 300,000 customers. He agreed that those 1,800 customers “deserved the reparations they got”.Narev said that the review of the bank’s financial advice went back to 2003 and contacted more than 300,000 customers. He agreed that those 1,800 customers “deserved the reparations they got”.
Narev also confirmed the CBA would refund $105.1m, plus interest, for 40,000 customers who were charged financial advice fees despite not being allocated a financial adviser.Narev also confirmed the CBA would refund $105.1m, plus interest, for 40,000 customers who were charged financial advice fees despite not being allocated a financial adviser.
He recognised that was a “significant” amount of money and customers affected but said the error was not intentional but the result of “poor implementation”.He recognised that was a “significant” amount of money and customers affected but said the error was not intentional but the result of “poor implementation”.
Coleman quizzed Narev about a committee proposal to require banks to publicly disclose breaches of licence conditions soon after reporting them to Asic, including naming managers responsible for sections involved.Coleman quizzed Narev about a committee proposal to require banks to publicly disclose breaches of licence conditions soon after reporting them to Asic, including naming managers responsible for sections involved.
In opposing the proposal, Narev said that public reporting of breaches occurred expeditiously, often before managerial responsibility and disciplinary consequences had been determined. “Executives are entitled to due process,” he said.In opposing the proposal, Narev said that public reporting of breaches occurred expeditiously, often before managerial responsibility and disciplinary consequences had been determined. “Executives are entitled to due process,” he said.
Narev suggested that disclosing disciplinary consequences in annual reporting to shareholders would be more appropriate.Narev suggested that disclosing disciplinary consequences in annual reporting to shareholders would be more appropriate.
Narev reiterated the CBA’s opposition to a bank royal commission. He said it would send a “very damaging message” of low confidence in policymakers, regulators and bank management.Narev reiterated the CBA’s opposition to a bank royal commission. He said it would send a “very damaging message” of low confidence in policymakers, regulators and bank management.