Misconduct not just down to ‘bad apples’

The heads of NAB and ANZ are being grilled by federal politicians about how they are responding to the damning findings of the banking royal commission.

ANZ chief executive Shayne Elliott says structural issues and internal processes should cop the brunt of the blame for misconduct across the banking sector, and not “a few people with bad intentions”.

Mr Elliott told the House of Representatives’ economics committee on Wednesday that blaming banks well-publicised failings on greed risked sparing institutions from facing up to necessary systemic and cultural change.

“(Putting it down to greed) takes us down the path of blaming it on a few bad apples and a few people with bad intentions,” Mr Elliot said. “I don’t believe that’s right. I think our processes and governance structure have a lot to do with it.”

Both Mr Elliott and the interim chief executive of National Australia Bank, Philip Chronican, are being grilled by federal politicians on Wednesday about how they are responding to the damning findings of the banking royal commission.

Commonwealth Bank boss Matt Comyn and Westpac chief executive Brian Hartzer were questioned by MPs earlier this month.

Mr Elliott told MPs in Canberra the royal commission had been a “profoundly humbling experience” that had been completely justified by the changes underway across the sector.

When asked about a recent commitment by Australian Securities and Investments Commission chief prosecutor Dan Crennan to put bankers in jail, Mr Elliott said people should pay the consequences of poor behaviour or misconduct or breaking the law.

“I guess the real question here … I would have thought the right outcome here is not how many people are in jail but do we have a fully functioning financial system that’s responsible and that generates the right outcome for our customers,” he said.

Mr Elliott said ASIC’s interpretation of responsible lending laws and conservatism among big banks had also undoubtedly helped squeeze credit availability, though the situation had become “a little bit chicken and egg”.

“If people are finding it harder to get credit, they might want to step back from investing in their business or buy a home,” he said.

Meanwhile, deputy chief executive Alexis George confirmed ANZ had 650 outstanding complaints from the Australian Financial Complaints Authority as of Wednesday.

She said the bank had more than doubled remediations and settlements over the last two years to $200 million, with another $365 million flagged in September as well as $150 million in related costs.

Mr Elliott said that amount was likely to increase in the short term but hopefully reduce over the medium term, though he did not give a target. “If we are well managed and well run we shouldn’t have any remediations,” he said.

CHRONICAN SHOCKED AT DEPTH OF MISCONDUCT

Appearing in the afternoon, NAB’s Mr Chronican says he was surprised at the depth of wrongdoing uncovered both at the company and across the wider financial sector, but says his bank now has the capacity to win back customers’ trust.

Mr Chronican told the committee that the royal commission had identified a “significant gap” between what NAB told it, and what the bank was doing, for which former boss Andrew Thorburn was ultimately forced to take responsibility.

Mr Thorburn and NAB chairman Ken Henry resigned last month after being named and shamed in commissioner Kenneth Hayne’s final report, with Mr Chronican stepping in as interim chief executive earlier this month.

Mr Chronican told federal MPs in Canberra the royal commission had been a wake up call for the bank, and he admitted the lender had let down its customers and frontline staff.

“(This is) much more than the 76 final recommendations in the (royal commission) report,” Mr Chronican said. “We’re asking our customers and community to judge us on the actions we take.”

Originally published as Misconduct not just down to ‘bad apples’