The first of four big bank CEOs has fronted a parliamentary committee and has admitted the banks know they need to do better by their customers.
The CEO of the Commonwealth Bank, Ian Narev, has told a parliamentary committee that Australian banks, including the CBA, know they need to do better by their customers.
He's apologised to victims of bad bank behaviour but admits he expects more cases of poor customer outcomes down the track as well as more announcements regarding compensation for those affected.
Mr Narev has fronted a federal inquiry into the banks, run by a parliamentary economics committee made up of ten MPs and senators from Labor, the Greens and the coalition.
"I have personally met with customers whom we have let down. I've done so in order to understand their experiences first hand. I've said before how sorry I am for the pain that we've caused them. I say so again today," Mr Narev told the committee.
“I think today there's still work to do. But I think we're doing a lot better at listening to the cases of individual customers.”
He has defended huge profits made by the banks and confirmed that no one at the CBA has been sacked for poorly dealing with individual customer cases including rejecting life insurance claims from people with a terminal illness.
“At this stage we have not had individuals terminated as a result of this because we have not seen the need to do that. If we do, we've got very clear principles on it, we will make sure that happens,” he said.
“So no one’s been terminated at the moment involving cases of rejecting terminally ill claims or the others that I've highlighted.”
Mr Narev is the first of four big bank CEOs to front the government-initiated parliamentary inquiry this week.
They are being grilled for three hours each on consumer rip offs, dodgy financial planning advice and unethical behaviour in general within the banking system.
Today, the chair of the House Economics Committee, David Coleman, asked Mr Narev whether the sector would welcome funding a banking tribunal to help curb unethical behaviour within the industry.
Mr Narev replied, “We would be absolutely open to that, we'd be supportive of it.”
Another committee member brought up the issue of incentives for banking staff who sell additional products to customers like life insurance.
Mr Narev defended giving them bonuses as a result.
He told the committee, “what we encourage them to do is engage with their customers, to have conversations about their financial needs, and we're happy to reward them for doing that in a good way.”
Mr Narev was also asked about his own yearly salary to which he responded that his base salary is just over $2.5m.
ANZ CEO, Shayne Elliott will front the inquiry tomorrow, while the NAB's Andrew Thorburn and Westpac's Brian Hartzer are scheduled to appear on Thursday.
Labor, the Greens and some of the independents say the inquiry falls short of the royal commission that victims are calling for given the banking sector has been in the spotlight over a series of financial scandals over the past decade.
Treasurer Scott Morrison said a royal commission was unnecessary.
"I understand why people feel they may want one but you have to look at what's practically going to help people and strengthen the system, that's what we are getting on with," he told Ray Hadley on Sydney's 2GB radio.
Australia Institute poll shows most Australians want a royal commission
The left-leaning Australia Institute has released a poll that shows the majority of Australians polled, 68 per cent, agree with calls for a royal commission into the banking sector.
The poll showed only 16 per cent of people were opposed and coalition voters were slightly less likely to support a royal commission than Labor or Greens voters.
Tougher penalties for market manipulation
The hearings come as the Reserve Bank begins the process of rolling out tougher penalties for banks that manipulate the bank bill swap rate, a key benchmark used to price billions of dollars of loans, bills, bonds and derivatives.
Treasurer Scott Morrison has put out a media release about the Reserve Bank's recommendation to put legislation to parliament that would result in jail time for bankers found to be manipulating financial benchmarks.
The legislation will be put to parliament in the new year.
The Australian Securities and Investments Commission is already pursuing three of the four major banks over unconscionable conduct and market manipulation in setting the swap rate from 2010 to 2012.
- with AAP