Commonwealth Bank CEO Ian Narev has admitted to a parliamentary committee that not a single senior executive at his bank has suffered any consequences for the CommInsure, wealth management and rate rigging scandals.
In his second appearance before the Standing Committee on Economics, Mr Narev was grilled on Tuesday by Liberal chair David Coleman on executive accountability.
After running through a string of scandals at the bank, Mr Coleman summed up by asking: “Okay, so, wealth management, CommInsure, rate rigging — no consequences for any senior executives?”
“Correct,” Mr Narev replied. He said there were no findings of culpability. The big wigs didn’t know, weren’t complicit, needn’t have known.
Last year, corporate regulator ASIC reported the big four banks and AMP had been charging wealth management clients for financial advice they never received. The compensation payout for CBA alone is expected to reach $105.7 million, plus interest, to more than 50,000 clients.
The Commonwealth Bank has also paid $23 million in compensation to 1800 victims of bad financial advice.
No senior executive was fired because of these financial planning scandals, as the person responsible had already “left the company”, Mr Narev said.
Then there’s rate rigging. In 2012, ASIC began investigating potential rigging of the Bank Bill Swap Rate (BBSW) — an important benchmark rate used for business loans and indirectly for personal loans, which also serves as the interest rate used by banks when they lend to each other.
Since September 2013, the BBSW has been electronically calculated from market data collected by the Australian Financial Markets Association.
Before then, it was set by AFMA based on submissions by up to 14 banks, quoting the interest rate they were paying and receiving at 10am each business day.
ASIC alleges that CBA and the other three big banks manipulated the BBSW to their own advantage by supplying inaccurate data to AFMA. Two Commonwealth Bank traders have ‘left the company’, but no senior executives have faced any consequences.
That brings us to CommInsure, the latest and perhaps biggest scandal in the bank’s life insurance arm.
A joint investigation by Fairfax Media and the ABC last year alleged that bank doctors were being pressured to change their assessments of customers to avoid payouts; delayed payouts to terminally ill customers; and refused claims of former staff who were medically retired.
At the hearing, Mr Narev was also forced to defend the fact his bank did not update its definition of ‘heart attack’ in 2014 when it was told by CommInsure chief medical officer Dr Benjamin Koh that the definition was outdated and resulting in client claims being denied.
Mr Narev admitted this “wasn’t a good decision”, but defended Dr Koh’s firing for ‘breach of client privacy’. He denied the claim from a committee member that it was retribution for Dr Koh’s whistleblowing.
Again, all senior executives kept their jobs.