Banking royal commission: are the banks really listening?

You have to wonder if there is any sincere change of heart among bank bosses, even after the royal commission revelations.

ANZ chief Shayne Elliott is yet to appear before the banking royal commission. Picture: Hollie Adams

Are the banks really listening? It must be infuriating for any potential home loan applicant to hear the CEO of ANZ Bank, Shayne Elliott, telling us it will be harder to get a mortgage because of the financial services royal commission.

The grim warning, delivered without a hint of irony, comes from the CEO of a bank where “the instances of inappropriate advice” soared from 60 to 2810 in seven years, and where a financial adviser who had been suspended was allowed to keep working for almost a year afterwards.

And customers are now going to pay for the clean-up, says Elliott, who has watched his underlings being carved up in the court of public opinion but who has not himself taken the long walk of shame to face royal commissioner Kenneth Hayne.

As Elliot pointed out: “The impact of royal commission (on lending) will be real … it is more likely we will say no when in the past on balance we would have said ‘yes’. ”

But the point is that ANZ management said “yes” in the past to the wrong people again and again.

Maybe it’s time to stop moaning about compliance costs and, you know, get compliant.

No wonder the big four banks are on the nose and no wonder financial planners are rushing for the exits to start their own independent agencies.

Customers too cannot be far behind, with the regional banks and notably credit unions — led by the Customer Owned Banking Association — making serious efforts to grab some market share in these torrid weeks of banking interrogation.

In fact, nobody wins here.

While Elliott was alerting potential customers to the growing disposition of his bank to turn them away, ANZ shareholders have watched the bank share price sink over the last year back to where it was in 2015, at about $27.

To be fair Elliott has recently conceded: “It is now clear to me the royal commission is necessary and justified.”

On the red-hot issue of compliance and procedure he has also promised: “We are going to be much more robust to make sure we have got everything.”

But between the lines you have to wonder if there is any sincere change of heart among the ruling regime at the big four banks and the major insurers as the inquiry rolls on.

The next important phase of the inquiry is going to examine how banks behave in relation to small business.

Once again we can expect all four big banks — ANZ, Commonwealth Bank, NAB and Westpac — to be prominent in these sessions, with the lingering issue of how banks dealt with struggling customers in the immediate aftermath of the GFC looming as a key test.

When we get to the far end of what will surely be a litany of heart-tugging case studies where small business owners were crushed by the big banks, will the bank chiefs respond in a similar fashion?

Will they conclude by warning small business their costs will go up to after this expensive and embarrassing inquiry?

Let’s hope not,