Banking Royal Commission: Senior ANZ manager channels Sergeant Schultz as Esanda car loans probed

An ANZ banker has reached for the Sergeant Schultz defence while giving evidence about the bank’s former car loan arm.

Commissioner Kenneth Hayne. (Eddie Jim/Pool)

A senior ANZ banker giving evidence at the financial services royal commission has reached for the Sergeant Schultz defence, telling the inquiry he doesn’t know what went on at its former car loan business Esanda because he never worked there.

The royal commission is today examining misconduct at Esanda, which ANZ sold to Macquarie in 2015 for $8.2bn.

Last month, following legal action brought against ANZ by the corporate regulator, the bank agreed to Federal Court orders under which it admitted that while it owned Esanda it broke responsible lending laws and paid a penalty of $5m, together with the Australian Securities and Investments Commission’s legal costs of $120,000.

ANZ chose the general manager of its small business bank, Guy Mendelson, to give evidence today about its car finance business.

However, Mr Mendelson has this morning told the commission he knows little about crucial details of Esanda’s business because he never worked for it.

His lack of knowledge appeared to echo the “I know nothing” catchphrase of the hapless Sergeant Schultz character, a German army officer responsible for oversight of prisoners of war during WWII in the 1960s American sitcom Hogan’s Heroes.

Mr Mendelson became responsible for asset finance, which includes car loans, in July 2015.

The bank sold Esanda less than four months later, on October 8.

During his evidence this morning, he repeatedly said he did not know the answers to specific questions about Esanda’s practices while it was owned by ANZ.

Asked by counsel assisting the commission, Albert Dinelli, how much dealers received as an “origination fee” for writing Esanda car loans, Mr Mendelson said: “I can’t comment because I don’t know.”

Pressed by Mr Dinelli on whether this fee was in the hundreds of dollars, he said: “I genuinely don’t know.”

And asked if customers were informed that the decision on whether or not to charge the fee was entirely up to the car dealer’s business manager, he responded: “I don’t know, I can’t comment.”

Mr Mendelson was also taken to a December 2014 letter ANZ wrote to dealers, in which the bank told them that if it failed to meet the bank’s requirements when providing credit it would come after them for any costs involved.

Mr Dinelli put it to him that one reading was that ANZ “expect you dealers to make sure everything is done to comply with responsible lending obligations”.

“To be quite honest I’m not 100 per cent sure how to read that paragraph, it’s very ambiguous,” Mr Mendelson responded.

Mr Mendelson told the commission steps had been taken to improve practices since he took over the asset finance division.

ANZ kicked 500 of 3,000 brokers out of its network in late 2016 and introduced a test they need to pass to remain accredited.

And in December last year it abolished “flex commissions”, which enable car dealers to jack up their commissions by charging customers a higher interest rate.

These are still allowed by ANZ’s rival Westpac, the commission heard yesterday — even though Westpac claims it wants them eliminated.

Flex commissions have been banned by ASIC, effective November 1.