Watch live coverage of the public hearing into the big four banks
THEY’VE managed to skirt calls for a royal commission, but the chiefs of Australia’s big four banks are about to front up to parliament.
With millions of Australians fed up with their fat bonuses, insurance and financial adviser stuff-ups, the pressure is on for these corporate titans to outline how they will fix the scandal-plagued sector.
As the head of Australia’s biggest bank, the Commonwealth Bank — caught out knowingly using outdated medical definitions to deny insurance payouts — Ian Narev will be the first cab off the rank. His grilling by the House of Representatives Economics Committee is scheduled to begin at 2pm.
The high-flying chief executive, who took home $12.3 million in the last financial year, will no doubt have spent last night preparing his lines.
Although he apologised on behalf of the bank over its outdated heart attack policy, which allowed it to reject claims on the basis of an unscientific blood test, Mr Narev has previously vowed not to be pressured into compensating “unreasonably” disgruntled customers who were “trying to embarrass” the bank.
Giving evidence today, he will face the image management challenge of a lifetime while contending with an aptly-timed Monday night 7.30 report on the case of former Comminsure customer Peta Outzen, who fatally overdosed on the painkiller oxycodone in 2014.
The bank refused to pay out on the mother-of-two’s life insurance on the grounds that the policy did not cover suicide, despite the fact that the NSW coroner declared her death to be accidental, the ABC reports.
Her father John Outzen said the bank refused to reverse its decision, despite suicide having been ruled out by a police investigation and post-mortem.
“It was like a kick in the guts,” he told 7.30. “Are they so big that they can just do what they feel like? They’re actually a law unto themselves. That’s what it looks like.”
Conflicting responses were given to the program by the bank, which promised a review, but said accidental death policies did not cover non-prescribed drug use.
AUSTRALIANS WANT ANSWERS
As the Parliamentary hearing gets under way, a new poll by The Australian Institute shows that a majority of Australians want a royal commission, with 68 per cent agreeing that a higher level of scrutiny was needed to bring the banks into line.
Public faith in banking institutions was at abysmal levels, research by consumer group Choice showed, with just 31 per cent of Australians expecting to be treated fairly if they had a complaint, and only 20 per cent believing life insurance claims would be treated fairly.
“Over the next few days, the big four banks will try and tell us that they’ve changed their ways and will do better next time,” Choice chief executive Alan Kirkland said.
“It’s time for their CEOs to answer tough questions about what is leading to such poor outcomes for consumers … For too long, the big banks have blamed their problems on bad apples and one-off mistakes.”
He said the chief executives should be grilled about trust, sales incentives and outrageously high fees.
The failure of the banks to pass on official rate cuts in full, while accumulating massive profits, was a major bugbear for consumers.
“Last year, Australians paid nearly $12.5 billion in bank fees. At the same time, the big banks posted record profits. This adds up to a simple conclusion — banks aren’t competing on fees and product costs,” Mr Kirkland said.
“CEOs need to be asked why fees have gone up over the last three years even though they’ve faced lower costs with a record-low cash rate?”
He called for “meaningful reforms” to protect customers from the banks’ “deeply flawed practices”.
A LIMITED INQUIRY
Labor’s shadow assistant minister for Treasury Matt Thistlethwaite, who will be given 20 minutes to quiz the CEOs, believes the three-hour hearings won’t go far enough.
“If we had a royal commission in the banking industry … a whole magnitude of issues come through that we are not going to deal with today,” he told Sky News.
In a bid to defuse pressure on the issue, Treasurer Scott Morrison this morning announced a tough new approach to policing the sector.
Criminal penalties, including jail time, could be imposed for unconscionable conduct and market manipulation in setting bank bill swap rates — a key benchmark used to price billions of dollars of loans, bills, bonds and derivatives — Mr Morrison pledged.
The government maintains that a royal commission would take years, cost hundreds of millions of dollars and wouldn’t have any further powers than ASIC already has to go after banks.
— With AAP
The CEO’s of the big four banks will appear before a parliamentary banking inquiry in Canberra next week.