Banking royal commission: CBA’s Matt Comyn lobbied ASIC on super undertaking

CBA CEO Matt Comyn lobbied ASIC’s deputy chairman to overrule the corporate regulator’s head of enforcement.

Commonwealth CEO Matt Comyn. Picture: AAP

Commonwealth Bank chief executive Matt Comyn lobbied Australian Securities & Investments Commission deputy chairman Peter Kell to overrule the corporate regulator’s head of enforcement, who wanted to slap an enforceable undertaking on the bank over mis-sold super products, the financial services royal commission has heard.

Last October, Mr Comyn, who was then the head of the retail division of CBA, called Mr Kell to try to get the watchdog to drop its threat of an enforceable undertaking in return for the bank putting out a media release.

The revelation that executives at the bank fruitlessly attempted to twist the regulator’s arm came during a bruising examination of CBA’s wealth management boss Linda Elkins yesterday.

Ms Elkins revealed the company’s trustee Avanteos Investments found it was charging fees to dead customers as early as 2015 and thought an appropriate course of action was to update the product disclosure documents with the fact that dead customers would be charged fees. In April, during the second round of hearings for the royal commission, it was revealed CBA’s financial advisers had continued to charge the estates of dead people, after which Ms Elkin’s Colonial First State launched an internal investigation to see whether it was happening elsewhere.

The commission heard yesterday that after discovering in 2015 that it was taking money from dead customers, CBA considered whether it should warn customers in a product disclosure statement that “we will continue to charge adviser service fees after the member has died”. Ms Elkins said she didn’t know why the bank considered this to be a realistic response to the breach, but that the bank didn’t follow through with the plan.

“You’re saying in 2015 and 2016 the view wasn’t that it shouldn’t be done — the view was that it needed to be notified to the members — but in 2018, the view is it shouldn’t be done?” asked counsel assisting the royal commission, Michael Hodge QC. “That’s right, yes,” Ms Elkins said.

However, an internal 2016 presentation tabled by Mr Hodge on the topic of “fees post death of the member” said the bank was continuing to charge the fees, “but are looking to put controls in place after, say, three months”.

“Was a control ever put in place for the fees to stop after three months?” Mr Hodge asked. “No,” Ms Elkins said.

CBA’s recently sold CommInsure life insurance business was also put under the microscope, with a review of the company’s policies by actuarial firm Rice Warner finding the group’s premiums were extremely uncompetitive for white-collar workers, with some policies more than 132 per cent more expensive than the market average.

Despite this, Ms Elkins admitted Colonial never sought a better life insurance deal for its super members.

“On balance, the decision that’s been made has been to negotiate with the incumbent insurer,” Ms Elkins said.

The royal commission also heard investment management fee negotiations between Colonial and its CFS Asset Management arm did not result in market-beating results for members.

A Chant West report tabled at the commission showed the fee for nearly every CFS product was outside the benchmark range.

CBA recently agreed to ASIC’s enforceable undertaking after it found it was shunting customers into its own superannuation products under the impression they were receiving personal financial advice, which it was not permitted to give.

The royal commission heard that in August last year Larissa Shafir, CBA’s head of compliance, proposed four steps to ensure the bank could keep selling its super products through its branches without having to provide personal advice — it had set up “Project Everest” to make this happen — after the bank had been negotiating with the head of the regulator’s powerful enforcement team, Tim Mullaly.

“Rather than moving forward with (the enforceable undertaking), what’s being suggested is Mr Comyn will call up Mr Kell to see whether maybe you can still get a deal done on the basis of a media release rather than an EU,” Mr Hodge said.

A subsequent email showed Mr Comyn responding to the email chain, in which he said he had “left a voicemail for Peter Kell” and that he would “revert with (a) response”.

In another discussion where Ms Shafir told Mr Comyn ASIC may not be for turning, Mr Comyn wrote back: “I think we should keep trying.”