The standing committee on economics has insisted that “nothing has changed” in CBA’s culture, and accused the lender of “destroying” confidence in the banking industry.
At yesterday’s bank hearings, Labor MP Matt Thistlethwaite called out the CBA-commissioned Deloitte report into CommInsure as unfair.
“The cases that were reviewed were broadly broken in two categories: total and permanent disablement (TPD) and death claims. Of the TPD claims, 217 of 2172 were reviewed, which equates to about 10 per cent, but 98 per cent of death claims were reviewed.
“TPD claims have a high denial rate, but death claims are the least disputed area of claims. That's not a fair report, because you've basically stacked the figures to ensure that the outcome was favourable to your organisation.”
In response to CBA CEO Ian Narev’s insistence that the report was robust, due to the fact that it was a “globally recognised” brand that conducted the sample, Mr Thistlethwaite retorted: “That's the thing about all these things that you do, you find someone that you say is independent to hide behind.
“You find an organisation to hide behind to back you up, you claim legal privilege on documents that would otherwise prove cases against you. It's more of this cover up. It's the case that nothing has changed.”
“It's been reported that no customers were interviewed... here you've got a report that's arisen because victims have been denied claims, but you didn't interview the people that were covered by the policies, that's obnoxious. It beggars belief.”
Mr Thistlethwaite also highlighted that the Sedgwick review into banking remuneration is "littered" with quotes from big bank staff saying that they are forced to sell products onto customers when they are not in their best interests.
“This is the whole problem with the industry, that you fail to rectify that people are forced into products that aren't in their best interests, and when things turn sour, they're left with nothing,” he said.
While Mr Thistlethwaite suggested that a royal commission into the banking industry would be the “best way” to restore confidence, transparency and accountability, Mr Narev remarked that it would not be positive for the perception of the industry as “unquestionably strong”.
Mr Thistlethwaite responded: “Pardon my cynicism Mr Narev, you guys have done a pretty good job at destroying confidence in the banking industry over the last decade, haven't you?”
On CBA’s credit card interest rates: ‘Is that fair?’
In response to CBA’s explanation that the interest rates on their low rate, low fee and awards cards are 13.24, 19.74 and 20.24 per cent respectively, Scott Buchholz MP questioned: “Is that fair?”
He highlighted that the interest rate for CBA’s low rate card is 2 per cent higher than the competition in the market. “It perplexes me that there is such a flippancy that it is OK for a bank to charge those rates,” he said.
“The committee has recommended that ASIC establish a small team to make recommendations to the treasurer every six months on the improved competition in the banking sector. ANZ have dropped their interest rates… CBA has signalled that they don't have an appetite to drop their credit card rates.
“I will stay in this space until I've seen fairness because I'm at odds when you come in here and you say to me that it's fair.”
‘Something constructive has to change’
Julie Banks MP said that the bank needs to “put some heart” into the issue of fairness, which would be best achieved by considering a stronger risk management framework.
“Reflecting on the October hearings, the most shocking thing for me was when you said to this committee that the first time you heard about the CommInsure cases was when they came to the media. Clearly something is broken in terms of identifying risk,” she said.
Pointing to the Deloitte report, Ms Banks remarked that its terms of reference were limited.
“The report [concludes] that you're confident that no one is engaging in wilful misconduct, but it's often not the wilful misconduct that causes the issues, it's the negligent or lazy or sloppy misconduct, and that is why banks need to, with a sense of urgency, look very constructively outside the paradigm of APRA and ASIC and look into a constructive internal robust risk management framework in line with recommendations.”
She concluded: “You have to get your skates on in terms of this risk management framework. It's imperative that we get this done now, we can't engage in a talk fest that goes on years and years, we need to get results now. Something constructive needs to be done at the front end.”