Brian Hartzer: Westpac ‘on good terms with ASIC’

Brian Hartzer says disagreement between Westpac and ASIC ‘occasionally happens’.

Westpac chief executive Brian Hartzer. Picture: AAP

Westpac chief executive Brian Hartzer has downplayed the royal commission’s implicit finding of a combative relationship between the bank and ASIC, saying the commentary related to incidents from three to four years ago.

In a media call yesterday, Mr Hartzer said Westpac wanted a transparent, open and responsive relationship with the conduct regulator.

“Some of the issues we’re working on we just have a genuine disagreement and we don’t like that to happen but it occasionally happens,” he told The Australian.

“At senior levels I would say we have a professional relationship with ASIC. I would hope they would think they are seeing improvements and we’ll have to continue to work on that and we are.”

Compared with his scathing ­assessment of National Australia Bank’s leaders, commissioner Ken Hayne had a relatively mild view of Westpac’s approach to conduct and compliance.

Westpac, he said, stood apart from its rivals by maintaining some aspects of its wealth operation, BT Financial Group.

The bank’s challenges could therefore be different to those confronting Commonwealth Bank, NAB and ANZ Bank.

“And while I do not doubt Mr Hartzer, when he says that Westpac has sought to ‘reset’ its relationship with ASIC, only time will tell whether that proves to be right,” Mr Hayne said.

The Westpac comments came as chief executive Shayne Elliott appointed two senior executives to lead a review of the Hayne royal commission’s final report, urging all staff to comply with both the letter and the spirit of the law.

Deputy CEO Alexis George and chief legal counsel Bob Santamaria will oversee the review.

ANZ’s executive committee, including Mr Elliott, would work with the team.

The ANZ chief said the main themes in Mr Hayne’s report that resonated with him were the ­importance of non-financial risks; the need to evolve remuneration practices to support the right culture and “hold ourselves accountable”; and the focus on compliance with the law.

“Commissioner Hayne acknowledged that no bank will ever operate perfectly,” Mr Elliott said.

“That, however, does not mean there is nothing to be done.”

Mr Elliott said he agreed with Mr Hayne that banks had to more to prevent errors.

Despite the surge in bank share prices that followed the release of Mr Hayne’s final report on Monday, Mr Hartzer rejected suggestions the report was benign compared with some of the dire predictions for the industry.

He said it was a “very serious” document with 76 recommendations that would have a profound impact on the industry.

The royal commission, he said, was a “huge wake-up call” for banks on the importance of non-financial risks, such as conduct and reputation.

Its significance was equivalent to the industry’s 1991 lesson on ­credit risk, and the 2008 scare on ­financial markets risk from the global financial crisis.

“I think it will drive significant improvement in the way the ­industry, and certainly Westpac, runs our business into the future,” Mr Hartzer said. “It’s a turning point for the industry.”

While remuneration for the mortgage broking industry faced upheaval, the Westpac chief said good brokers provided a service and choice for customers throughout the lending process and would continue to have viable businesses “regardless of how they charge”.

More transparency, however, was a good thing, so customers could properly assess the value of the service.

“The brokerage fee is clearly a significant amount of the cost of the home loan and bringing more transparency to it is hard to argue with,” Mr Hartzer said. “But I think brokers are subject to the same forces of disruption as banking generally and (the industry) will need to continue to evolve.”

Westpac dodged a bullet in Mr Hayne’s report, which avoided making any recommendation that would lead to dismantling of vertically integrated wealth businesses.

Mr Hartzer said Westpac had always taken the view that the ownership structure of businesses was unimportant by itself; the real issue was the management of conflicts of interest. “Our view has been we could manage that with the move to a fee for service, open platform and the like,” he said.