ANZ, NAB considered customer remediation ‘a distraction’

ANZ and NAB executives regarded compensating customers they ripped off as a ‘distraction’, the banks have admitted.

Shayne Elliott addresses the parliament hearing in Canberra yesterday. Picture: Gary Ramage.

ANZ and NAB executives regarded compensating customers they ripped off as a “distraction”, the banks admitted yesterday.

Shayne Elliott, the chief executive of ANZ, yesterday confessed to parliament that his bank was “unfortunately” one of two fingered by the corporate regulator over internal documents referring to remediation as a distraction.

And a spokeswoman for NAB, whose chief executive Andrew Thorburn is to face parliament next Friday, told The Weekend Australian it was the other bank.

Mr Elliott was grilled by Labor MP Matt Keogh about a report released last month in which the corporate regulator slammed three banks — ANZ, CBA, and NAB — for taking an average of a year to start paying compensation after figuring out that they had dudded clients.

“We identified historical documents from two of these major financial groups that referred to remediation for consumers as a ‘distraction’,” ASIC said in the report. “This is evidence of a misalignment in these two groups’ cultures with their stated values of prioritising consumers.”

Asked if ANZ was one of those two groups, Mr Elliott said: “Unfortunately, yes”.

CBA chief executive Matt Comyn yesterday said his bank was not one of the two groups in question, leaving NAB as the only remaining possibility.

A NAB spokeswoman told The Weekend Australian ASIC’s reference was to a slide in a 2016 “NAB Risk Culture Guide” titled “Getting it wrong always costs more than if we got it right the first time”.

She said the second dot point on the slide read: “Remediation tasks distract management away from opportunities to meet customer needs.”

NAB was “working hard to be better for customers and have made remediation a priority”, she said. “We acknowledge that in the past we have been too slow to find and fix issues and to remediate customers.”

Appearing before the House of Representatives economics committee yesterday, Mr Elliott said he was “embarrassed” to read banking royal commissioner Kenneth Hayne’s scathing interim report into the scandal-ridden financial services industry, apologised for the bank’s misconduct and said it had not done enough to hold executives accountable for wrongdoing.

He said that last year ANZ had fired 200 employees for misconduct, but not all the terminations were related to the royal commission.

Mr Elliott, who has been CEO since 2016 and before that was chief financial officer under former boss Mike Smith, told the committee that “in the past, ANZ has not focused sufficiently on formally holding executives to account for failures that harm customers”.

He slammed ANZ’s previous “matrix management” structure for blurring lines of responsibility and said the bank had moved towards a simpler command structure.

Under questioning from Labor’s Matt Thistlethwaite, Mr Elliott said the bank would take another look at its so-called “balanced scorecard”, which is used to determine bonuses for staff.

He accepted that a referral metric on the scorecard used by home lending managers that was tabled before the royal commission “can be interpreted as a quasi-sales target, and that shouldn’t be the case”.

Mr Elliott said reading Mr Hayne’s interim report, handed down a fortnight ago, “was frankly really saddening. It made me feel embarrassed for the industry,” he said. “We have broken the trust of many of our customers, for which there is no excuse and I apologise.”

He said that while he was ultimately responsible for the bank’s culture, it was something that had built up over 185 years.

“Direct and documented links between specific failures and consequences have been limited and insufficient,” he said.

“This is particularly true for events, including those studied by the commission, which have unfolded over time or occurred under a number of executives.”

Asked by Mr Thistlethwaite whether he stood by his statement to the committee in 2016 that a banking royal commission would be a distraction, Mr Elliott said: “No.”

“I was wrong,” he said.