All but one major bank oppose move to name executives involved in breaches
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Version 0 of 1. Three of Australia’s big four banks have opposed parliamentary recommendations that senior executives should be automatically named for breaches affecting customers. The chief executive of Westpac, Brian Hartzer, was the final of the big four bank bosses to appear before the house standing committee on economics reviewing past behaviour. Under the proposal, banks would be required to publicly disclose breaches of licence conditions soon after reporting them to the Australian Securities and Investments Commission (Asic), including naming managers responsible for sections involved and any disciplinary consequences. In the past week, Commonwealth Bank and National Australia Bank refused to support the recommendation, while the chief executive of ANZ, Shayne Elliot, supported the principle of naming executives but said the five-day reporting period was problematic. On Wednesday Hartzer said Westpac supported increasing transparency and accountability but it was not practical to report in such a way. “The point I am making is that when you get to the issue of consequences, in some cases where something is a massive significant issue, you might take action at that time,” Hartzer said. “In other cases, these things range, it is not black and white.” Hartzer said Westpac had “no issue” with identifying senior executives, but had concerns with elements of the recommendation including the timeframe and listing consequences. He said it was important for the banks to be able to explain disciplinary actions, because it was “more complicated than X happened with Y consequence”. In opposing the proposal Commonwealth Bank’s chief executive, Ian Narev, told the committee on Tuesday that public reporting of breaches occurred expeditiously, often before disciplinary consequences had been determined. Narev suggested that disclosing disciplinary consequences in annual reporting to shareholders would be more appropriate. On Tuesday Elliot told the committee that public disclosure could be implemented but questioned the proposal to link it to breach reporting to Asic. He warned that “overly punitive sanctions” could result in a “culture of fear”, preventing people speaking up about their own or others’ mistakes. In Wednesday afternoon’s hearing, the Australian Bankers Association chief executive, Steve Munchenberg, updated the committee on development of a “bad apples” register. The register would allow prospective employers to check if a bank worker had been fired or faced other disciplinary consequences at their previous employer. Munchenberg said the register was “easy to say but difficult to do” because of concerns about privacy and natural justice. He also warned it could be open to abuse if a manager threatened to put a staff member on the register, preventing them securing work elsewhere. Munchenberg said the industry was still developing the register but it might require legislation to establish. Committee member, Labor MP Matt Thistlethwaite told Guardian Australia the register should be run by Asic or the Australian Prudential Regulation Authority should provide the register so it is “not subject to industry manipulation”. Earlier in the hearing, the chair of the committee, Liberal MP for Banks David Coleman, raised the prospect of the Australian Competition and Consumer Commission (ACCC) having a standing function to examine competition across the industry as a whole. Coleman said the ACCC currently only focused on certain breaches of competition law but did not extend to the broad perspective of competition in sector. Hartzer replied that the sector already “feels very competitive”. “We don’t fundamentally object [to ACCC reviews] but we don’t think it’s necessary.” Hartzer noted the financial system inquiry had recommended giving Asic a mandate to review competition and argued six-monthly ACCC competition reviews would amount to duplication. Munchenberg said the banking sector didn’t have “perfect competition”. But he opposed a dedicated unit in the ACCC, deriding it as a “make-work program”. The parliamentary committee was established by the Coalition in response to pressure from Labor, the Greens and Nick Xenophon for a royal commission. Asked about a royal commission, Hartzer said it would be expensive and would not bring about immediate action and the banking industry was already highly regulated – echoing the government’s objections to such a commission. On Tuesday Elliott said the large number of more targeted reviews currently under way were better at achieving “real change”. Labor and Liberal MPs traded barbs about the necessity of a royal commission. Labor’s Madeleine King arguing that threats of a royal commission had prompted other reviews. Liberal MP Julia Banks said a royal commission was like a semi-trailer attempting to do a U-turn, compared with the “snappy sports car” of more targeted reviews. Last month a former Westpac banker was sentenced to three years in prison after signing up elderly customers to $4m in loans they could not repay. The bank also decided to refund foreign transaction fees paid by hundreds of thousands of credit card customers after it decided it has disclosed too little information about the charges. Westpac, NAB and ANZ are also facing legal action over allegations of rate rigging. Hartzer said the bank was disputing some of allegations in the past six months but it was on the path to closing the “trust gap”. |