Banking royal commission hearings revealed hearts broken, dignity robbed by banks’ greed
Banking royal commissioner Kenneth Hayne is renowned for being impossible to read, and it took a lot of heartbreak to finally crack the solemn veneer of his poker face after hearing it all over the past year of hearings.
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It took a lot of heartbreak to finally crack the solemn veneer of banking royal commissioner Kenneth Hayne’s poker face.
He’d heard it all in the past year: threats to evict tearful widows from family homes; estates of dead people raided by greedy banks and financial planners; beleaguered hospital patients told their cancer was not “radical” enough.
Through it all, Commissioner Hayne, QC — renowned for being impossible to read during his almost 20 years as a High Court judge — maintained a Zen-like authority.
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But even Mr Hayne, a dad himself, struggled when the phone recording was played of a 26-year-old man with Down syndrome battled to extricate himself from a junk Freedom Insurance policy he had been badgered into buying.
The young bloke got pocket money from loving parents who looked out for him, but they also tried to encourage his independence. But they couldn’t have expected a cold caller from an insurance company to prey on their clearly intellectually disabled son. Or for the battle to cancel the policy to go on for months.
Mr Hayne drew the commission audience to the recording in which the young man struggles — with the help of his supportive dad — to get through the conversation to get out of the contract.
“I think the community might have been particularly struck by the phone call where the agent insisted upon the son uttering the words ‘I want to terminate the policy’,” he said. “There’s a particularly affecting record.”
The commissioner understands the public rage.
Sure, we always suspected the finance giants had been taking our money, but how did they get away for with taking many peoples’ dignity as well?
The riches that went to those who displayed such tawdry behaviour were great, Mr Hayne showed over the past year. The salesman who sold the insurance to the young man was open to sales awards including Vespa scooters and trips to Bali.
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“Why did it happen? Too often, the answer seems to be greed — the pursuit of short-term profit at the expense of basic standards of honesty,” Mr Hayne said as a cause of the scandals.
The cases of greed were frequent and shocking.
Financial planners for Commonwealth Bank subsidiary Count Financial took fees from dead clients — one planner took $1000 a year for almost a decade after their client died.
Aussie Home Loans were blasted for keeping tearful victims of a shonky mortgage broker in the dark about his fraud — all the while, they continued to collect trailing commissions on the $70 million of loans he wrote.
Rogue National Australia Bank staff falsified documents to secure mortgages for customers in return for cash bribes paid across the counter.
Mr Hayne stressed that cultures around banks came from the top, which is why executive pay was important.
In November, the commission heard how the Commonwealth Bank asked former chairman David Turner to hand back some of the fees he was paid in his final year after a series of scandals engulfed the bank.
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Mr Turner, who was paid $437,000 that year for his role overseeing the board, refused the request.
It was bigger than just pay, though. Before the commission, many Aussies thought the law was black and white for the big financial institutions. But when it came to enforcement, it appears to have been more of a dance.
What — for instance — would you expect to happen if a major financial institution that had existed for 170 years and was valued at $15 billion discovered it was ripping off customers?
This is exactly what wealth management powerhouse AMP was faced with in 2015.
The company commissioned a supposedly independent report to give to the corporate cop — the Australian Securities and Investments Commission — about the scandal. It was supposed to be a tough look at how it had been charging customers for services they never received since at least 2009.
But instead, AMP then involved itself heavily in the editing process, including successfully having chief Craig Meller’s name scrubbed from the report, after he had been named as one of those who received legal advice. Mr Meller has now left, as has the group’s chief lawyer, group general counsel Brian Salter and chairman Catherine Brenner.
AMP has said it will complete its customer refund program in three years and it will cost $778 million.
Mr Hayne has been scathing of the corporate regulators, the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority.
In August, the commission accused National Australia Bank of keeping the corporate cop in the dark in October 2016 after electing to pay
$34 million in compensation to superannuation customers slugged for services they did not receive. The figure had grown from $16.2 million. NAB was simply trying to avoid bad publicity in the lead-up to its annual results, counsel assisting Michael Hodge, QC, said.
NAB consumer and wealth chief customer officer Andrew Hagger revealed that on October 24, the group’s superannuation administrator had agreed to approve the bigger compensation pool.
But when talking to ASIC commissioner Greg Tanzer hours after the meeting, Mr Hagger may have failed to mention that.
Questioned as to whether he told Mr Tanzer about the revised figure, Mr Hagger said: “I can’t recall.” Mr Hagger was gone the next month.
ASIC has since taken NAB to court over its fee-for-no-service breaches. Late last year, NAB revealed $435 million had been set aside to deal with such cases.
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But the message from Mr Hayne over the past year was that banks were not going to get away with it any more.
Reactions across the sector to this message are varying. The banks are said to be on the hook for billions. Some businesses have closed.
The fate of Dover financial advice group was one of the most memorable exits.
In April, Dover owner Terry McMaster was in the hot seat, being warned the company’s so-called “customer protection policy” was “Orwellian” and possibly breached laws.
Mr McMaster started hyperventilating and slumped in his seat. “Get an ambulance pronto,” Mr Hayne ordered.
The courtroom was cleared and a smiling Mr McMaster was wheeled out of the Federal Court to a waiting ambulance. His business closed down a couple of months later.
That moment was also memorable as another rare time that Mr Hayne let his
poker face slip.
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