Day 355: 'The goodwill of our people'
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 355.
Today in summary: whistleblowers and bank victims lament the end of the Hayne royal commission hearings; NAB’s ‘self-assessment’ shows some interesting self-reflection; and the Group of Thirty hints at some of the recommendations we may see from Commissioner Hayne next year.
-- Charis
Current banker panic level: 😨
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With the last of the Hayne royal commission hearings done and dusted, the overwhelming response from whistleblowers and bank victims has been “more please”. The commission heard from 134 witnesses, and took in 400 witness statements, not nearly enough according to victim and campaigner Geoff Shannon. Likewise, investigative journalist Adele Ferguson says the time and limited terms of reference of the commission meant it didn’t go far enough or deep enough.
Perhaps Commissioner Hayne will recommend a system of “spot checks” of bank cultures, suggests Alan Kohler, “along the lines of Health Department spot checks of restaurants for cockroaches”.
Consumer group CHOICE has kicked off a campaign asking bank customers to write to their MPs calling for an end to bank self-regulation and bonuses and commissions that reward aggressive sales practices.
SMH | The Australian | The Guardian
The self-assessment of governance, accountability and culture APRA requested of NAB in June landed on Friday, and didn’t grab too many headlines. Once you break through the corporate speak, there are some interesting reflections on what exactly within the bank’s culture meant its staff didn’t always put customers first. They paint a picture that’s familiar to many of the major banks - frontline staff left to cover for expanding complexity and ageing IT systems, and senior bankers unwilling to take accountability for solving problems.
“We encouraged a ‘get it done’ attitude, at the expense of enforcing strict disciplines about what gets done where, and how it gets done.”
“Too often we defaulted to the collaboration, discretionary effort and goodwill of our people particularly those who interact every day with our customers instead of building better processes, systems and tools to support them.”
The Group of Thirty, vice-chaired by former Westpac chief Gail Kelly has revisited its 2015 recommendations for the banking sector post the global financial crisis, honing in on 12 areas where it says more work needs to be done. Many of these tie in with the lines of inquiry at the Hayne royal commission, including improvements to board governance structures, the need to remove the link between quantitative sales targets and compensation for sales staff, and the problem of making it clear who has responsibility for conduct risk.
More worryingly, however, the bankers the group surveyed flagged a lack of faith that the industry has really changed; the potential for “culture fatigue”, and a fear changes pushed through won’t stick in the longer term.
Today’s burn prize: Whistleblower Jeff Morris
🔥🔥🔥
“Having been inside the banks, it is a very sycophantic world where nobody contradicts the corporate speak and everyone drinks from the same water fountain.”
Financial services insider turned whistleblower Jeff Morris is happy more people have now seen what he saw, but remains unconvinced there was no malicious intent behind misconduct by bankers.
The Commentariat
The decision by Commissioner Hayne not to ask for an extension of the royal commission showed impeccable judgment, writes the AFR’s Karen Maley.
“This happy coincidence of timing means that Commissioner Hayne can be confident that whatever recommendations he makes in his final report, they'll be enthusiastically embraced by both sides of politics.”
The ongoing remediation costs and cuts to executive pay will stay with senior bankers for some time, writes the SMH’s Elizabeth Knight. But the impact may not be as long lasting as the well entrenched need to maximise their company’s profit.
“Commissioner Kenneth Hayne won’t be there to remind them of their duty to customers and the community, but large investors will always remind bank executives about the requirement to grow profits. The share price and twice-yearly profit and loss statements will always be there to provide that scorecard.”
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