Banking royal commissioner Kenneth Hayne’s plan for CEOs

The big four bank chief executives will face intense scrutiny at the Hayne royal commission on controversial topics.

Royal commissioner Kenneth Hayne. Picture: David Geraghty.

The big four bank chief executives will face intense scrutiny at the Hayne royal commission on controversial topics including pay, ­accountability for poor conduct, fees charged for no service and the use of third parties including mortgage brokers.

Industry sources told The Australian the big four banks, AMP and Bendigo and Adelaide Bank had already been served with a string of notices by the royal commission on those and other topics, requesting further information.

The commission issued the notices and wants to delve further into the “causes of misconduct and conduct falling below community standards” and possible responses including regulatory reform. They were served ahead of the royal commission’s policy round, which will see chief executives front up to commissioner Kenneth Hayne for the first time.

That round begins in Sydney on November 19 and is followed by another week of hearings in Melbourne.

The commission is yet to request witness statements for those that have been asked to appear, according to sources.

It has already outlined that Australian Securities & Investments Commission chairman James Shipton and his Australian Prudential Regulation Authority counterpart, Wayne Byres, will be grilled as part of the final round of public hearings, too.

Both regulators were dealt criticism in the interim report for taking a light-handed approach to enforcement action against financial services companies.

In his interim report, Mr Hayne found that the reason for bank misconduct “too often … seems to be greed — the pursuit of short-term profit at the expense of basic standards of honesty.

“How else is charging continuing advice fees to the dead to be explained?”

On the mortgage broking industry, which accounts for more than 50 per cent of new mort­gages, the interim report said ­“assertions” by Aussie Home Loans and other broker groups that commission-based remuneration structures in the industry were not causing bad outcomes “are not to be accepted”.

The chief executives of the Sydney-based major banks, including Matt Comyn at Commonwealth Bank and Westpac’s Brian Hartzer, are likely to appear in the first week of the policy round. Andrew Thorburn of National Australia Bank and Shayne Elliott of ANZ will have their turn in Melbourne.

The major bank chiefs did, however, get a practice run in Canberra as they faced off against the federal parliament’s Standing Committee on Economics last month.

Acting chief of beleaguered wealth group AMP, Mike Wilkins, was not required to appear in Canberra and his appearance will generate a lot of attention.

AMP has experienced the biggest fallout from the royal commission, which brought forward the retirement of its CEO Craig Meller and claimed the scalp of chairman Catherine Brenner earlier this year.

Their exits followed torrid revelations about the poor treatment of ­financial advice customers and deception of the corporate regulator.

Mr Wilkins faced the wrath of shareholders, though, at AMP’s annual general meeting in May when he labelled the company’s misconduct “absolutely unacceptable”.

On Wednesday, it was CBA chairman Catherine Livingstone’s turn to face shareholders and receive a tirade during a three-hour AGM. She told shareholders the bank had strengthened many of its compliance processes on the back of the royal commission and the prudential regulator’s scathing assessment of its governance and culture.

“We have greatly strengthened that (whistleblower) process in the past 18 months,” she said. “The board is now much better informed … we recognised that we didn’t treat whistleblowing as we should have.”

Under immense questioning over the board’s responsibility for many of the CBA scandals, Ms Livingstone highlighted the non-executive director renewal process and said the board was taking a more aggressive approach to probing executives.

“What has happened was ­totally unacceptable … we don’t resile from that,” she said, adding that the board was “determined to address” all the issues.