Ross Greenwood speaks to Economics Committee Chair Tim Wilson ahead of the bosses of Australia’s four big banks facing a parliamentary committee in Canberra where they will be asked to explain what changes are being made in the wake of the Royal Commission.
Introduction: Bank bosses to face grilling from Parliamentary Committee
Ross Greenwood: Anyway, today, The Australian Banking Association has indicated that they will change the banking code of conduct to ensure that these things do not happen again. I spoke a little earlier with the chief executive of the ABA, Anna Bligh, here’s what she said.
Anna Bligh: The public expects banks to act on what the Royal Commission is uncovering. it is important that banks have taken this step. We can argue about whether they could have done it earlier, but frankly, it’s important that they do it. It’s important that customers have these protections. It’s important to confidence in the system that people know that where a service has not been provided they will not be charged.
Ross Greenwood: I would have thought Blind Freddie could have told you that, but that’s at least something that the Royal Commission has done. Well, now the chief executives of the four major banks will face the house of representatives reference committee on economics. This is where they get their grilling from our politicians. The chief executive of the Commonwealth Bank, Matt Comyn will be first off the rank tomorrow. He’ll be facing, initially, the chair of that committee, Tim Wilson, who is on the line right now. Many thanks for your time, Tim.
Interview with: Tim Wilson, Liberal MP, Economics Committee Chair
Tim Wilson: Thanks, Ross. Great to talk to you.
Ross Greenwood: What would be your first question to the chief executive of the Commonwealth Bank tomorrow?
Tim Wilson: I’m not going to give away my first question.
Ross Greenwood: Come on, you can. You can give it away here, it’s not as though he’s not prepped for all of these. What are you going to hit him with first up in the wake of the Royal Commission?
Tim Wilson: I’m not going to do that, but what I am going to say is that I think what the Australian people are expecting from the banks tomorrow, is a clear sign that they understand the anger, the frustration, and at times the rage, and the the broken trust they feel as a consequence of what’s been revealed out of this Royal Commission. The banks have a responsibility to communicate that loud and clear and then to show what they’ve done, to respond to it, so that this never happens again.
Ross Greenwood: As you may be aware, there’s been new polling that’s just been conducted by the former news poll chief executive Martin O’Shaughnessy’s company OmniPoll. It reveals that each of the four major banks has experienced an increase of about 20% in negative sentiment over the past 18 months, with nearly one in two people critical of the Commonwealth Bank. In particular the disillusionment is most pronounced amongst Australians aged over 65. They really do have a lot of repair work to be done.
Tim Wilson: They do and this is the critical thing. There’s been a trading on trust of the bank and they need to confront very clearly and start to rebuild trust. The way you be rebuild trust is not to gloss over , it’s to recognize that people feel wronged and even if they haven’t personally, that other people have been taken advantage of, and to focus how the culture of banks, internally, is going to focus on putting customers first, if you want to do that repair job.
That is going to be the critical thing that the CEO’s going to have to show and also the pathways that if people do have complaints in the future, that they’ll be taken seriously.
Ross Greenwood: There is no doubt what has come out of the Royal Commissioner has indicated that the behaviour of banks has been reprehensible in many ways. In particular, putting the profits of their organizations, well and truly, ahead of the interests of their customers, when the customers should have been protected first and foremost. However, I just want to ask you Tim, what role do federal politicians, on both sides of our house, what responsibility do they have in not having funded our corporate regulators properly, not having really provided a mandate in those corporate regulators that they should have been feared and not negotiated with. Because that again, has come screaming out of the Royal Commission loud and clear.
Tim Wilson: That’s true, and one of the great tasks we have is you need regulators that work cooperatively with institutions, like banks, but also that carries the sticks to beat over them if they do the wrong thing. One of the things that’s come out of this report, the Royal Commission is that that balance isn’t right. We’re looking at that. One of the things we want to know, from the thanks again tomorrow’s, is what is it that would get them to take the regulations seriously.
The foundation of any relationship between the banks and the regulator has to be honesty and there needs to be very clear penalties as well. Let’s not also pretend that the regulators have been perfect, they haven’t been. We need to highlight, very clearly, what they’ve failed and they’ve missed along the way as well.
Ross Greenwood: You could argue that they have not been well enough resourced to be able to put in place the investigations in every instance that needed to be done. That they did not have the people in the right places. They didn’t have, necessarily, the powers of surveillance that they needed. In other words, it comes down to whether they have been properly resourced by our federal politicians.
Tim Wilson: Well, that’s part of a discussion. I don’t think anybody off any discussion about what we need to do in response, not just with the banks, but critically with the regulators. If there are resourcing issues, if there are personnel issues, but if also, there are issues around holding the right carrots and sticks to make sure the banks are doing the right thing. We are absolutely open to those discussions, to make sure we get this right and it doesn’t happen again.
Ross Greenwood: It’s interesting to note that this committee and the inquiries of these chief executives was put in place early on in the process, when calls for a Royal Commission were loud and clear to almost try and, if you like to, to divert the attention from the need for a Royal Commission. Given the fact that the House of Reps Reference Committee has had these chief executives in front of them a number of times, I’m just wondering now, given what we’ve heard in the Royal Commission, whether that the level of questioning needs to be raised on the chief executives of the banks, because much of what we’ve now discovered from the Royal Commission certainly, didn’t come out in this committee previously.
Tim Wilson: Well, that’s true that it didn’t come out because they’re dealing with often individual cases. This committee’s focus is much on the higher level of policy. One of the things the government was always looking at is providing a pathway for individual customers to be able to provide complaints, to be able to address the issues that they have. The Royal Commission has obviously provided that in the short term, but part of the dialogue has to be what’s necessary in the long term, so we don’t need a Royal Commission every time people have a complaint because they have a clear pathway for the future.
Ross Greenwood: It seems, at the moment, that the government is determined to, at least, have a Royal Commission into the age care industry, which I think a lot of people would think is welcome and long overdue. There’s been terrible things occur there. There’s even suggestions there may be a Royal Commission into the electricity and energy sectors. Do we really need Royal Commissions to have the powers of investigation? The powers of inquiry to find out what’s going wrong in every industry where we feel as though there’s pressure in our community?
Tim Wilson: Well, this is precisely why the government said Royal Commission aren’t not the sole solution to the problem. We also need standing bodies that actually provide the pathways for customers to have a complaint. With the age care sector, I think it’s completely different and unique. I’m actually on the health and age care committee, we’ve dealt with a lot of these challenges around a system designed in one way and is not being able to adjust to the changing needs of consumers and, yes, in times there have been horrific things that have also occurred in that sector.
Should we need a Royal Commission? No. Part of the discussion and out of the conclusions of the Royal Commission is, what do we need to make sure this doesn’t happen again?
Ross Greenwood: There you go, Tim Wilson, the member for Goldstein and also the chair of the House of Representatives Reference Committee on economics that will be grilling the chief executives of our four major banks starting from tomorrow. Matt Comyn, as I say, the boss of the Commonwealth Bank, is the first one. We don’t know what the first question will be. I could almost write it for you, I would imagine, in regards to the Royal Commission. Tim, I’ll find out tomorrow morning. Many thanks for your time.
Tim Wilson: Thanks, Ross. Take care.
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