Banking royal commission: King & Wood Mallesons dealt second slap down

King & Wood Mallesons lambasted over its bungled response to requests for information from the bank inquiry.

*Commissioner Kenneth Hayne. Picture: Eddie Jim/Pool

The royal commission has for a second time slapped down blue-chip law firm King & Wood Mallesons over its bungled responses to requests for information from the inquiry.

King & Wood Mallesons was thrown into the spotlight at the royal commission on Thursday after counsel assisting the commission, Rowena Orr, QC, dissected the law firm’s drawn out response to the inquiry’s requests for documents from the group’s client insurance company Youi.

Youi chief operating officer of claims handling, Jason Storey, was put back on the witness stand for a second day after admitting the company had not dealt with its customers efficiently, lacked the resources to repair homes in the wake of large natural catastrophes, hired builders it knew were unreliable and had a compliance department that believed its disputes and complaints process was “non-compliant”.

But the tale of King & Wood Mallesons’ late submission of documents to the inquiry was rattled off to the hearing at the end of its probing of Mr Storey.

Ms Orr told the commission on May 17, Youi was asked to produce the entirety of the information held by the company relating to Broken Hill customer Sacha Murphy, whose house and young family were under threat from lead poisoning but was prevented from fixing the contamination when insurer Youi failed to repair the home after a hailstorm. Ms Murphy told the commission her house had still not been fully repaired after the November 2016 hailstorm.

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However, when King & Wood Mallesons responded to the request by the May 24 deadline, the law firm only produced a “first tranche” of documents with a cover letter outlining that Youi was continuing to review audio files related to the claim.

King & Wood Mallesons then, a day later, handed over a second tranche of documents stating that it comprised “complete production” of information in the “time available”.

Youi chief operating officer Jason Storey appearing at the financial services royal commission. Picture: Supplied

But on June 7, solicitors working for the royal commission, who had been going through the audio notes Youi had sent the inquiry, sent an email to King & Wood Mallesons saying that it appeared Youi employees on the phone calls were updating notes in a claims handling database. However, the royal commission had not received any such notes from a database.

The next day, King & Wood Mallesons handed over copies through email of the so-called “claims notepad” for Ms Murphy’s claim. It took a further four days before the law firm “formally” submitted the documents to the commission.

The royal commission was also told that one phone between Youi and Ms Murphy or her husband was not recorded, but that it would have been noted in the database. It took until June 29 for Youi to hand over five more documents in response a notice to produce the information.

‘“That’s all we wish to say about that matter, commissioner,” Ms Orr said.

Sacha Murphy leaves the Commonwealth Law Courts in Melbourne after giving evidence in the banking royal commission yesterday. Picture: AAP

It’s the second time the royal commission has made a point of publicly airing the dealings between it and King & Wood Mallesons, after commissioner Kenneth Hayne earlier slammed the wealth manager IOOF over its “ill based” attempt to hide secret documents detailing discussions between regulators and its subsidiary Questor Financial Services.

The former High Court judge recently published a ruling on an application to prevent documents from being made public during the royal commission, in the process demolishing the repeatedly tardy behaviour of Questor’s lawyers — King & Wood Mallesons. The law firm has argued that information in the documents was subject to legal professional privilege, an argument demolished by Mr Hayne.

The royal commission heard Youi did not investigate Ms Murphy’s drawn out saga and bungled complaints process until May this year after the royal commission began asking the insurer about the scandal.

It also heard the claims handling staff responsible for failing to address Ms Murphy’s claim promptly and efficiently had only suffered a “written warning”

“Why was a complete review of this file one?” Ms Orr asked. “Because of this commission,” Mr Storey said.

“We missed multiple opportunities to get this right,” he said.

The commission heard there was a breakdown between Youi staff when using the claims notepad, with one employee had written an email complaining about one of the workers not acting on notes left in the notepad.

“I keep asking you and you are just not coming to the party. You are forcing me to take disciplinary action. Why do you keep ignoring my note pads. It looks like you just don’t care. For the sake of awesome service, we cannot drop the ball like this. It’s just not fair,” the email said.

When asked why Youi did not take action against the staff member, Mr Storey said the company did “nothing more than total inaction” on the employee.