ANZ CEO Shayne Elliott has defended his bank's handling of poor management of its financial advisory arm, fee overcharging and the failure of a managed investment scheme causing bankruptcies and financial hardship for many clients.
He is the second big bank chief to appear before the parliamentary economics committee, following the Commonwealth Bank's Ian Narev and ahead of Westpac and the NAB.
The inquiry comes after Prime Minister Malcolm Turnbull demanded the banks appear before the committee at least once a year following a series of banking scandals.
Mr Elliott says he understands why the government and the public want an explanation for some of the recent scandals in the banking system.
"I think that, as an industry, we've lost touch with our customers and we have become too internally focused and forgotten our role in society and the community at large. And when we've lost sight of that, that's taken us down a path that's created bad behaviour, some poor culture, and really not treated customers with the respect they deserve. And that's why we're here, to explain that, I believe, and say what we're going to do about it."
Mr Elliot has admitted the bank poorly managed its OnePath financial advisory and life insurance arm, blaming more than a million breaches on a failure to thoroughly test systems.
About $30 million was deposited in the wrong superannuation funds, and other breaches included the ANZ failing to follow up on uncashed cheques.
They included life insurance claims and super benefits.
Mr Elliot has also told the committee the ANZ has changed its processes after having to repay nearly 400,000 customers almost $29 million in overcharged fees.
He denies the bank delayed reporting fraud by financial managers to the authorities but agrees breaches by financial managers have increased by 750 per cent.
Mr Elliot has told the committee the bank has fallen short of its own standards.
"Each time we fall short, we potentially harm a customer or a member of the community, and, for that, I apologise. When we fail our customers, it is my job to take accountability, apologise, fix it for the customer as quickly as possible, and make the changes required to stop it happening again. Public scrutiny, and accountability over what we do and how we behave, is a fair part of the process."
Federal Labor is unhappy about the Government's way of handling the banking system inquiry.
It wants a royal commission, arguing it would be a better way to force the banks into operating properly and would provide a path for gaining redress for those treated poorly by the banks.
But Prime Minister Malcolm Turnbull says he disagrees.
"All Labor has is they say, 'Have a royal commission.' You know they're like the sort of a pirate's parrot, they just keep on saying the same thing, 'Have a royal commission, have a royal commission.' That's all they want to say. What we are doing is getting on with the job of ensuring that there are changes to the law, changes to banking culture, changes to banking practice, setting up a tribunal. We're doing all of those things, giving additional powers to ASIC, taking on the issues of misaligned incentives with insurance, but we're taking action right now."
The banking tribunal being considered could force banks to pay compensation to those who have suffered from unethical banking practices.
It could also possibly be able to subpoena documents and make decisions about past financial scandals.
The Commonwealth Bank has already said it could support such a tribunal.
Opposition Leader Bill Shorten says he will continue to press for a royal commission.
He says it is fairer, more transparent and has the time to dig deeper into what goes on behind the banks' closed doors
"A three-day inquiry where Labor MPs are allowed 12 minutes to ask questions, that's not an inquiry, that's a whitewash. What we are seeing in this inquiry over the three days is, what we're seeing is, the Government openly colluding with the banks, negotiating what is an acceptable cover up to avoid a royal commission."
The National Australia Bank and Westpac will appear before the committee tomorrow.
