Exclusive: Whistleblower Koh calls for bank breakup
Labor pledges incentives for whistleblowers, but legal changes still required.
Koh sets out what’s needed to remove conflicts of interest
By Alex Sampson
Burned CommInsure whistleblower Benjamin Koh says reporting on corporate wrongdoing remains a career-limiting and daunting task.
“The problem is that the legal onus to prove victimisation still lies with the whistleblower,” Dr Koh told Australian Banking Daily.
“It will only change when there is a change in the legal system.”
This comes amid news a Labor government, if elected, will offer cash rewards whistleblowers who dob in criminal or unethical corporate behaviour.
Labor has vowed to introduce a compensation scheme, worth hundreds of thousands per tip off, for workers who put themselves out on a limb to expose wrongdoing in an attempt to provide the protections burned whistleblowers, such as Dr Koh, have been waiting for.
Dr Koh said part of bringing this to reality was putting the burden of proof on the organisation, or boss of the whistleblower, to prove that any consequence – for example a change in duties or termination – for the whistleblower was not a result of the whistleblowing.
He also said that any new legislation needed to ensure legal costs were considered, knowing first hand that legal action in whistleblowing cases can be cost prohibitive and time consuming.
“The organisation with large and endless resources should be committed to being a model litigant, and/or the statutory body or ombudsman can prohibit the defending party (ie. the company) from legal representation (eg. hiring a QC or senior counsel to fight the victim),” Dr Koh suggested.
Dr Koh said it was key to create a dedicated statutory body or ombudsman – similar to Australian Financial Complaints Authority, but dedicated to whistleblowing – if the government was serious about beefing up protections for whistleblowers. He made this recommendation to the Parliamentary Committee on Corporations and Financial Services during its hearings in 2017.
Removing conflicts of interest
Dr Koh, who was the chief medical officer of the Commonwealth Bank's insurance arm, CommInsure, when he blew the whistle on entrenched unethical behaviour to ABC Four Corners, said doctors hired directly by insurers were still expected to provide a “certain direction in the medical opinions they gave so as to be most financially advantageous to the insurer”.
“Until there is an independent body that administers this function, there will always be a conflict of interest for any ‘independent’ medical examiner (IME), when it comes to a medical claim assessment, especially for very subjective mental health-type claims,” Dr Koh said.
“It will only change when there is a change in the legal system.”
Dr Koh made several suggestions for legislative changes he thought would strengthen the insurance sector and make it fairer for customers, as well as more ethical for workers within the system.
He hoped to see in the final banking royal commission report a legally-binding code of conduct that included strict timeframes for assessing a claim, “instead of allowing claims to be dragged out in perpetuity until the claimant dies”.
He also wanted to see a ban on accessing medical records at the time of a claim, arguing that if insurers do not ask for the records during underwriting when the customer buys the insurance, they cannot access them afterwards.
Additionally, he suggested insurers should update their medical definitions, with the banking royal commission having revealed some insurers were using definitions that were up to 20 years old.
“There should be an independent body that sets the minimum standard for the medical definition and that all insurers must conform to. This should be reviewed annually,” Dr Koh said.
Dr Koh, agreeing with Hayne’s assessment in his interim report, said vertical integration of banking and wealth management services was at the heart of the problem.
“Imagine a doctor owning a pharmacy and having no professional code to act in the best interest for the patient. They will be prescribing the most expensive pills regardless if it is what the patient requires,” Dr Koh said.
“The person selling the insurance product must have a legal duty to act in the best interest of the customer. Vertical integration does not allow that. The seller will be biased towards their employer's own product or the product that pays the biggest commission.
“My view is that we need a separation of retail banking services, ala Glass-Steagall
in the US.”