CBA boss Catherine Livingstone lays blame on ex-chiefs’ conduct

CBA chairwoman Catherine Livingstone echoed attacks on former CEO Ian Narev made by current CEO Matt Comyn a day earlier.

CBA chairman Catherine Livingstone leaves the royal commission hearing yesterday. Picture: Hollie Adams

The chairwoman of the Common­wealth Bank, Catherine Livingst­one, used her appearance at the banking royal commission to lay the blame for a series of scandals at Australia’s biggest financ­ial institution at the feet of her predecessor and the company’s former chief executive.

Ms Livingstone echoed attacks on former chief executive Ian Narev made by current chief executive Matt Comyn during his appearances at the commission in the past two days, but broadened her criticism to take in former chief financial officer David Craig.

She also blasted the board that she joined 10 months before taking over from then chairman David Turner, slamming as “inadequ­ate” its response to a money-laundering crisis and critic­ising it for failing to properly challenge statements made by management.

Ms Livingstone’s appearance followed Mr Comyn’s second day of evidence yesterday, in which he revealed that his complaints to Mr Narev about a poor insurance product the bank was selling were met with the response: “Temper your sense of justice.”

Confronted by counsel assisting the commission, Rowena Orr QC, with a long list of scandals at the bank ranging from financial advice rip-offs to being used by drug and gun gangs to launder money, Ms Livingstone said they constituted a “damning chronology of in some instances the bank’s behaviour and in other instanc­es the bank’s control over non-financial risks”.

She said that when she joined the board in 2016 as an ordinary non-executive director, she should have done more to investig­ate red flags raised in the audit process. “We should have asked for the detailed reports but we didn’t,” she said.

After becoming chairwoman in January last year, she introduced a “show me, don’t tell me” board culture, she said.

She told the commission she was “not confident” in assurances about audits she received from Mr Craig.

In renewing the board and management, putting together a “remedial action plan” and tightening protocols around non-­financial risks, Ms Livingstone said the bank was undergoing a program of change and had more to do. “I don’t think I’ve reached a stage of satisfaction at all,” she said. “I want to see that our code of conduct is actually lived.

“And I want to see that people are actually disciplined through … the policy environment, so they understand what it is they have to do, and their duties.”

Asked what changes needed to be made at CBA, she said: “We’ve appointed a new CEO. And the CEO has almost a completely new management team.”

In his second day in the witness stand, Mr Comyn, who has spent almost 20 years at the bank, said he confronted Mr Narev about a shoddy credit card insurance product in May 2015 while he was head of the retail bank.

He said the bank was “not treating our customers fairly” and he now recognised the sales should have been reported to the corporate watchdog as a breach of CBA’s financial services licence.

He told the commission Mr Narev insisted it was a “very good product”, even though the bank eventually had to pay $10 million in compensation to 64,000 ­customers wrongly sold the junk insurance.

“Temper your sense of justice,” Mr Narev responded, according to notes of the meeting tendered to the commission.

The commission heard that new work done by accounting firm Ernst & Young indicated the number of customers the CBA might have to compensate for wrongly selling them the ­insurance may eventually climb towards 500,000.

Mr Comyn again discussed the credit card insurance issue with Mr Narev a year later, he said.

In an email sent ahead of a meeting with the Australian Sec­uriti­es & Investments Commission, Mr Narev told Mr Comyn, head of wealth Annabel Spring and general counsel David Cohen the issue was “an area of major risk overseas and we have been talking about it for some time”.

“As always, we must be guided by what is right,” Mr Narev wrote.

“We agreed, and it comes up in the email chain, that he would ask David Cohen to do a review independently of these products,” Mr Comyn told the commission.

Ms Orr asked: “And did Mr Cohen do that review?”

“No, he did not,” he said.

Asked if the bank had the right leadership in the past, he said: “No. Clearly, there’s a number of ways in which the culture of the organisation must change.”

Mr Comyn and Ms Livingstone are the first in a series of bank chiefs and chairpeople in the royal commission hot seat in its final fortnight of hearings.

Additional reporting: Melissa Yeo