ANZ chief says jailing bankers is not a priority

ANZ boss Shayne Elliott says regulators should put a “fully-functioning financial system” ahead of jail for bankers.

ANZ CEO Shayne Elliott appears before the parliamentary committee. Pic: AAP

ANZ Bank chief executive Shayne Elliott has argued that regulators should prioritise a “fully-functioning financial system” ahead of putting bankers in jail.

Appearing before the House of Representatives’ economics committee, Mr Elliott said people should pay the consequences for breaking the law.

He told MPs in Canberra the banking royal commission had been a “profoundly humbling experience” that had been completely justified by the changes underway across the sector.

When asked about any unintended consequences from putting bankers in jail, Mr Elliott said: “I would have thought the right outcome here is not how many people are in jail but do we have a fully functioning financial system that is responsible and generating good outcomes for our customers.”

Mr Elliott told MPs that structural issues and internal processes should cop the brunt of the blame for misconduct across the banking sector, and not “a few people with bad intentions”.

He said blaming banks’ well-publicised failings on greed risked sparing institutions from facing up to necessary systemic and cultural change.

“(Putting it down to greed) takes us down the path of blaming it on a few bad apples and a few people with bad intentions,” Mr Elliot said.

“I don’t believe that’s right. I think our processes and governance structure have a lot to do with it.”

Both Mr Elliott and the interim chief executive of National Australia Bank, Philip Chronican, were grilled by federal politicians today about how they are responding to the damning findings of the banking royal commission, which uncovered ripoffs by banks which are now being dealt with by compensation payments.

Commonwealth Bank boss Matt Comyn and Westpac chief executive Brian Hartzer were questioned by MPs earlier this month.

Deputy chief executive Alexis George confirmed ANZ had 650 outstanding complaints from the Australian Financial Complaints Authority as of today.

Answering questions, Mr Elliott said it was his long-term target to slash compensation payments to customers to zero.

Customer remediation costs over the last three years had totalled more than $200 million.

Last October, however, ANZ announced a further $374m in provisions for remediation.

While his personal target for remediation costs was zero, Mr Elliott said a realistic outcome was significantly less than $100m.

The ANZ chief earlier reaffirmed that the bank is “ready to lend”, but conceded that some people might find it harder to borrow because of higher lending standards based in the law.

The challenge, he said, was to find the right balance of prudence and availability within the regulatory framework.

“After a period of perhaps being too cautious, ANZ is easing back towards a sensible equilibrium,” he said.

“If we are to serve society, we must support the economy by lending responsibly and that is what we’re aiming to do.”

ANZ admitted in February that it hit the brakes too hard last year in home lending in the wake of the banking royal commission.

The ANZ chief also said the recent plunge in bond yields reflected a slowing outlook for the economy, and the market’s assessment that interest rates would be lower for longer.

As to buy now, pay later firms such as Afterpay, Mr Elliott said his concern was that some providers were not being held to the same standards as the banking sector, particularly in relation to responsible lending obligations.

With AAP