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Ken Henry's dumb performance on the royal commission is exactly what National Australia Bank did not need because it sought to restore trust with the community.
His attitude in the audience room was a surprise to all of us in the gallery on Tuesday morning.
Henry provided long answers that often took the form of lectures. He regularly informed the committee of questions he thought he should answer. And he has adopted an attitude towards the lead counsel, Rowena Orr, QC, who has at times been dismissive.
When Orr asked him if he had ever seen the very first document that she had shown him Tuesday, Henry replied that he could not remember it.
"It does not matter, is not it?" he said before looking at Orr and adding in a hurry: "Maybe so."
Publicity
If the style did not concern NAB, the substance should have been.
Henry strove to portray himself as a profound thinker, examining not only why NAB acted in this way, but also the philosophical issues at stake behind them.
But in doing so, he blurred NAB's ideas on key issues of governance and customer service.
For example, a question about how the board wanted salary incentives to be aligned with shareholder results has led to a discussion about "the state of capitalism".
"The capitalist model is that companies have no responsibility other than maximizing shareholder profits," Henry said. "A lot of people who have been involved in this debate over the last 12 months have said that all you should be asking boards to do is focus on maximizing profits for shareholders. "
He went on to say that the views on this point differ. "It is clear that the commission is free to engage in this rather important debate, which could play a valuable role, but whatever it may be, the NAB clearly believes that the incentives must be aligned with the # 39; customer experience. "
For what it's worth, it's a relief.
But for what it is worth, the commission will not enter into this debate as there is no debate between serious businessmen.
Broken investors
Even investors who may have thought the same thing in the past have surely been chastised by the events of the past 12 months.
Chanticleer has no doubt that Henry and NAB Executive Director Andrew Thorburn sincerely believe that capitalism is not limited to profits. But even suggest that there has been a serious debate about this over the past 12 months, in the context of the royal commission, the focus on social license to exploit and change perception that the NAB is trying to orchestrate were stupid.
Henry pointed to two other elements of the evidence.
Henry strongly agreed that NAB should continue to look after customers where they made mistakes, rather than wait to negotiate a correction with ASIC.
But he then told Orr that the commission should look for a way to indemnify or protect companies in cases where ASIC felt the correction was inappropriate or incomplete.
Later, he made an even more radical suggestion: NAB should consider funding clients to take legal action against the bank, as does the tax office when it wants to clarify points of law .
Orr was right to grab that. "Why get to that point, Dr. Henry, if the management and the board of directors are doing their job, why should you need someone to sue NAB for justice so that you can solve this problem?" she asked.
Again, the tone was completely wrong.
The NAB Board does not have to think about funding test cases – what kind of message would legal battles with its own clients like this send anyway? .
We learned on Tuesday that it was a bank that only two years ago had been informed by the prudential regulator that its compliance controls were below the expected level of an advanced bank. (Henry stated that he was "not surprised" by this message from APRA.)
And we learned on Tuesday that it was a board of directors that had accepted Thorburn's recommendation not to discount premiums for risk-related issues, despite the scandal of unsupervised fees and a number of regulatory issues exploding in the country. Context. (Henry said he was sticking to that decision.)
Maybe Henry was thinking aloud about test cases and allowances. Perhaps he thought he could contribute to a wider political debate. Maybe NAB will never really push for these things.
But that these ideas are even presented in a forum like the royal commission was at best inappropriate, and at worst prejudicial.
James Thomson
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