Royal Bank Commission: what do reports mean for Commbank, Westpac, ANZ and NAB clients

Commissioner Kenneth Hayne congratulated the CEOs of the five largest Australian banks at the conclusion of his public hearings last year to badess their response to the problems that his investigation had revealed.

"Most claimed to have learned from what had happened and presented their ideas about causes and responses. But the nature and extent of their commitment to these issues differed much more than I would have imagined, "Hayne wrote in the report.

"It seemed to me that there remained elements of reluctance to recognize and take responsibility for the misconduct of the types examined in this investigation.

"Some entities remain reluctant to form and then give concrete effect to their understanding of what is ethical, effective, honest and fair, and what needs to be done 'right'. Instead, the entity is content with statements of intent, vision or values. "

Hayne said both the CEOs of ANZ and the Commonwealth Bank were "perfectly aware of the size and nature of the tasks" that awaited them.

He expressed further skepticism about Westpac's claim that it had sought to "re-establish" its relationship with the regulator, ASIC.

But Mr Hayne has reserved a particular disregard for NAB, claiming he "differentiated" from the other three big banks and targeting his CEO, Andrew Thorburn, and his president, Ken Henry.

"After hearing the CEO, Mr. Thorburn, and the President, Mr. Henry, I am not as confident that I would like the lessons of the past to have been learned," he said.

"In particular, I was not persuaded that NAB was willing to accept its responsibility to decide for itself what to do, and then ask its staff to act accordingly.

"I thought that saying that Mr. Thorburn treated all the problems of service-less pricing as nothing more than negligence combined with system failures while the total amount to be repaid by NAB and NULIS on this account is likely to exceed 100. millions of dollars.

"I thought it was telling that the very week that the NAB CEO and President had to testify before the commission, one of his staff should send an e-mail to the bankers urging them to sell at least five loans. each one before Christmas.

"Overall, my fear – that there is a big gap between the public face that NAB is trying to show and what it does in practice – remains."

This part of the report is part of a section of the report devoted to the governance issues of Australian banks.

Mr. Hayne presented a tedious badessment of NAB's conduct with respect to the allocation of advisory service fees to members of the superannuation funds.

When the issues related to these fees were brought to the attention of the Board in 2015, it "has not done enough to convince management of the importance of solving the problem," said the Commissioner.

Instead, NAB has spent years negotiating with ASIC, repeatedly making proposals on how to investigate problems and compensate members, proposals deemed "unacceptable".

Meanwhile, the bank was not cleaning up its customers.

By November 2018, ASIC still was not agreeing with what it would do for some customers.

Mr. Hayne said it was an example of the type of bad governance that prevailed in the sector.

"When management acts to delay customer refurbishment and undermine the relationship between the bank and the regulators, the intervention board should step in and say," Enough, that's enough. Correct this, and correct it now, "he said.

Mr. Thorburn, CEO of NAB, was also distinguished by the report, which sought to portray the charging of fees for any service provided as a product of "professional negligence".

"In many cases, the costs for the lack of service were largely due to poor IT infrastructure … and legacy system issues," Thorburn told the Commission.

"I can not and do not accept it," said Hayne.

"As I told Mr. Thorburn, his proposal was that" this money accidentally fell into NAB's pocket. "Mr. Thornburn's frank and inevitable answer was:" I can not to disagree with that … it was not our intention, but it became ours. "

"The amounts of money that" fall into the pocket "of so many large and sophisticated financial entities, the number of times that has happened and the many years in which this is happening. is produced, show that it can not be swept away as a loss of money, incompetence or the product of poor computer systems. "

Service-less fees were perhaps the most serious part of the report, as Mr. Hayne revealed that he had referred the behavior of at least two entities to ASIC for possible criminal investigation. He did not reveal what entities they were.

Originally released as a distinguished NAB for his brutal slapdown