Day 430: 'Ken Hayne's Gospel of Enforcement'
Counting the days since the banking royal commission was established.
Good afternoon, and welcome to day 430.
Today in summary: ANZ says it will implement 16 initiatives as an initial response to the banking royal commission; NAB is giving outgoing chief Andrew Thorburn a A$1 million+ payout, just $22 million less that what he might otherwise have expected; and the government has extended the Australian Financial Complaints Authority’s remit to consider financial complaints dating back to January 1, 2008 - matching the royal commission’s investigation period.
-- Alex
@AlexESampson
Current banker panic level: 😨😨
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1. ANZ says it will implement 16 initiatives as an initial response to the banking royal commission, including scrapping overdrawn and dishonour fees on pensioner accounts and providing farmers with early access to farm debt mediation. The bank said in a statement that the measures would improve the treatment of retail customers, small businesses and farmers in Australia and ensure public reporting on the remediation of existing failures.
ANZ chief executive Shayne Elliott said:
“We are not treating our response to the Royal Commission as a compliance exercise. Rather, we are taking action now to respond to many of Commissioner Hayne’s recommendations that directly impact customers as well as the spirit of his final report. I’m confident these initial reforms will provide our customers with a fairer banking service.”
“This is only the first step and I acknowledge that the cultural changes we need to make will take several years. However, we will continue to make the investments needed to improve our bank and we will also move quickly to implement the recommendations requiring legislative change once those new laws come into effect.”
2. Outgoing NAB chief Andrew Thorburn will reportedly receive more than A$1 million in leave entitlements and exit payments. The bank on Wednesday said Thorburn would receive a payment of $1,041,449 in lieu of 26 weeks notice. The Australian is reporting that the amount is actually $22 million less than what Thorburn would have expected is he was still eligible for performance-related payment rights.
Meanwhile, outgoing chairman Ken Henry has been sidelined from the recruitment process for Thorburn’s replacement.
3. The government has extended the Australian Financial Complaints Authority’s remit to consider financial complaints dating back to January 1, 2008. This is the same period over which the banking royal commission considered cases of financial misconduct, allowing AFCA’s remit to match. AFCA will consider eligible complaints between July 1, 2019 and June 30, 2020.
AFCA chief ombudsman and chief executive David Locke said:
“We believe that this will provide access to justice and redress to many thousands of Australian consumers. In most cases, we are currently only able to consider matters that have occurred within the last six years. When a complaint has been through a financial firm's internal dispute resolution process, this timeframe is reduced to two years. This change means that many more people will be able to get access to justice and have their matters properly considered.”
Today’s burn prize: Labor MP for Herbert Cathy O'Toole
🔥🔥🔥
“How dare you not agree to more sitting days in order to enact the recommendations of the banking royal commission that would help protect Townsville residents from insurance companies after our worst ever weather event.”
O’Toole was discussing putting a bill before parliament that would enact recommendations from the banking royal commission, and give corporate regulator ASIC the power to have oversight over claims being handled by insurance companies.
The Commentariat
Australian Financial Review companies and markets editor James Thomson notes that the word enforcement appears in corporate regulator ASIC’s 14-page response to the Hayne royal commission recommendations 62 times. Thomson argues the response should be viewed as a “subtle pushback” against critics who have suggested dividing the watchdog’s enforcement function into a separate agency.
“As proof of its conversion to Commissioner Ken Hayne's Gospel of Enforcement, ASIC says the number of investigations into large financial institutions has spiked 50 per cent since the start of this month. There's been a 15% increase in enforcement investigations across the corporate sector more broadly and the watchdog is also ploughing through the commission's referrals, hunting for more scalps. ASIC has acknowledged that its enforcement culture must change.”
“It should be given time to demonstrate that changes can be made and to demonstrate that, once made, the changes are durable."
The Australian’s business correspondent Richard Gluyas writes that both NAB’s outgoing chair Ken Henry and interim chief executive Phil Chronican have been ruled out of the two board committees established to manage the selection processes for the new chairman and CEO, meaning “governance purists should be satisfied that the old regime has ceded control”. Gluyas speculates whether “wildcard” Chronican being sidelined is a sign he’s thrown his hat in the ring for permanent CEO.
“Chronican’s intentions are unclear.”
“The 62 year-old was a highly capable executive at both Westpac and ANZ, is well-regarded in the market and represents an appealing mix of outsider (as a NAB executive) and insider (as a non-executive director) who could lead the necessary cultural transformation.”
ANU Crawford School of Public Policy professor and a former Liberal opposition leader John Hewson writes in the Sydney Morning Herald that axing a few senior executives won’t help unless the banks revolutionise their “rotten culture”.
“There is very little in the commission’s recommendations that directly addresses the central weakness of the banking system, namely bank culture. Sure, many of the extreme abuses and examples of bad behaviour have been identified, and remedies suggested, but the root cause, while identified, has not really been addressed.”
SMH companies, markets and economy writer Elizabeth Knight digests NAB’s latest news, including that that the board is “attempting to put many miles between itself and the soon-to-be former chief executive, Andrew Thorburn”, and that Thorburn is getting a tough exit deal.
“Less than two weeks ago the Sydney Morning Herald and the Age reported that police had frozen nearly A$8 million in assets owned by the former chief of staff to Thorburn, including a $1 million NAB bank cheque as part of an investigation into alleged fraud inside the bank. While we are not suggesting Thorburn has done anything wrong, the alleged misconduct by others that is being investigated took place on his watch, suggesting he took his eye off the ball.”
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