Cameron England: Australia’s banks need to do better, not just tell us they’re going to do better

Over coming days, weeks and even months prepare yourself for a barrage of heartfelt apologies and promises from the big four banks and major financial institutions to do better. Ignore it all, writes Cameron England.

• Five-minute guide to the Royal Banking Commission
• Banking Royal Commission findings revealed

Over coming days, weeks and even months prepare yourself for a barrage of mea culpas, heartfelt apologies, and promises to do better from the big four banks and our major financial institutions. Ignore it all.

Words are cheap, and our banks have been telling us for years that their greatest concern is us, that they are “customer focused”, that they are here to “serve”.

Consider this example, no doubt penned by a highly-paid communications expert, setting out the values of the Commonwealth Bank while under the leadership of former managing director Ian Narev.

“Integrity, Collaboration, Accountability, Excellence and Service, define our culture and are how we are expected to treat each other and our external stakeholders as we work to achieve our vision.’’

These are the values which inspired the same Ian Narev who, according to the testimony of his successor Matt Comyn to the Royal Commission, told the latter to “temper your sense of justice”, after Comyn raised concerns about credit card insurance which he didn’t think was servicing customers well.

Ian Narev, former Commonwealth Bank of Australia managing director. Pic: James Croucher

The insurance in question, which provided help to pay your credit card should you fall ill or lose your job, was being sold to people who couldn’t even claim against it, such as students and the unemployed.

The bank was profiting by selling products to poor people which they couldn’t even use.

This is just one of a, frankly horrifying, litany of sins exposed by the Royal Commission which many argued we didn’t need.

Parents have told of financial products sold to their children, who, with diminished mental capacity, didn’t know what they were buying.

The delightfully glib phrase “fees for no service” was coined during the commission’s hearings. That one’s pretty self-explanatory.

And AMP was charging dead people for life insurance.

If you were charitable you could give the financial industry the benefit of the doubt, which would cast them, at best, as woefully incompetent.

But that would be too generous by a long shot.

These, and the many other infractions detailed by the Royal Commission, are not mere oversights.

They are the actions of people who have wilfully put aside ethical considerations in order to generate profits.

At the highest level, board directors and executives are schooled heavily in their obligations to shareholders and their obligation to act ethically.

They have zero capacity to argue that many of their actions were not unethical, and if they didn’t know about them they are not doing their job.

So why did they do it?

There are two easy answers: because they thought they’d get away with it, and because they were heavily incentivised to do the wrong thing.

Not everyone has a price, but most people do, and if you throw enough money at someone, they will find a way to convince themselves that what they are doing is right, or at least turn a blind eye to it.

I’ll interject here with a titbit from NAB’s mission statement: “Our business is founded on a commitment to create more of what matters for people, communities and the economy — a belief that motivates our people to do the right thing, show passion for customers, win together, be bold and show respect for people.’’

Contrast this with the characterisation of NAB chairman Ken Henry in the witness stand by our sister paper The Australian as “angry, dismissive, snide and flippant’’.

NAB chairman Ken Henry has been accused of lacking respect for the banking Royal Commission.

With these sort of friends at our back who needs enemies?

So where does that leave us as consumers if we can’t believe a word these people say?

It’s another easy answer: Watch what they do.

Firstly have they made a genuine apology?

But more importantly, have there been consequences?

Have the people who oversaw these terrible practices been fired? Have they lost their bonuses (note to the banking industry — how about you scrap them entirely and just pay people to do an honest day’s work), and will they gladly accept more scrutiny from regulators in the future?

And then decide whether you want to entrust these people with your money. There are plenty of other options out there. Small banks, credit unions, and financial services providers with genuine integrity.

The poor behaviour of the banks has life-changing consequences for people. Some get bonuses for doing the wrong thing, others lose their financial independence.

We can be part of showing them that it’s not OK, no matter how big the bonus pool is.

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