Malcolm Turnbull lashes banks over treatment of customers, advice scandals

Malcolm Turnbull has rebuked Australia’s scandal-plagued major banks over their treatment of customers.

Malcolm Turnbull says there have been too many troubling instances of bank misbehaviour. Pic Renee Nowytarger

Malcolm Turnbull has rebuked the nation’s major banks over the way they treat their customers, urging them to redress their wrongs after a series of scandals over ruinous financial advice.

The Prime Minister also lashed the banks for poor conduct and for their pay practices, warning they will endanger their social licence if they continue “the singular pursuit of an extra dollar of profit at the expense of values’’.

Mr Turnbull’s comments follow the corporate regulator’s legal action yesterday against Westpac for alleged interest rate rigging.

The Prime Minister said banks had been supported by taxpayers during the financial crisis.

But he told a Westpac function in Sydney: “The truth is that despite the public support offered at their time of need, our bankers have not always treated their customers as they should.

“Some, regrettably as we know, have taken advantage of fellow Australians and the savings they have spent a lifetime accumulating, seeking only dignity and independence in their retirement.

“Redressing wrongs is important especially where it is done promptly and generously.”

Mr Turnbull said there had been “too many troubling instances” in recent times for complaints to simply be dismissed.

The Prime Minister’s blunt comments come as the banks face investigations by the corporate regulator, as well as heightened scrutiny from federal parliament over financial advice that some customers blame for destroying their life savings.

The string of financial scandals at Australia’s major banks stretches from alleged interest rate rigging, to financial planning and life insurance.

In the latest incident, the Australian Securities and Investments Commission yesterday launched legal action against Westpac, accusing the bank of rigging Australia’s most widely used interest rate benchmark to boost its profits between 2010 and 2012.

It is the second action in as many months, with ASIC also seeking fines and court findings that ANZ broke the Corporations Law for similar conduct. National Australia Bank and Commonwealth Bank of Australia are also being investigated. ASIC has settled legal action with foreign banks UBS, RBS and BNP for similar conduct

Mr Turnbull declined to say whether he supported a royal commission into the banks, but told the audience of senior bankers and business people that banks needed to change their pay practices.

“Wise bankers understand that banks need to very publicly demonstrate that the values of trust, integrity, placing the customer first in every way way, these must be lived and not just spoken about.

“They recognise that remuneration and promotion cannot any longer be based solely on direct financial contribution to the bottom line.

“In a healthy banking culture. the singular pursuit of an extra dollar of profit at the expense of those values is not simply wrong, but it places at risk the whole social licence, the good name and reputation upon which great institutions depend’’

Mr Turnbull was speaking to a Westpac function in Sydney to mark the 199 years since the bank was founded.

“We expect our bankers to have higher standards, we expect them always, rigorously, to put their customers’ interests first,” he told the audience.

“And this is not idealism — this is what we expect and I know it’s what the leaders of Westpac expect.

“Because they know that banks don’t just operate under a banking licence, they operate under a social licence and that is underwritten by public confidence and trust.”