CBA boss’s stunning admission
THE Commonwealth Bank could face compensating hundreds of thousands more customers for dodgy consumer credit insurance on credit cards and loans, the finance royal commission heard.
Counsel assisting the Royal Banking Commission Rowena Orr QC said a report by consultants Ernst and Young from September this year said there could be about 374,000 extra customers affected by the problem products.
The bank has already been paying back about 90,000 customers after revelations in 2015 customers had been sold credit card insurance they could not claim on.
In questioning CBA's current chief Matt Comyn, Ms Orr said: "So the upshot was that EY raised concerns about the sales process or value of the product for about 374,000 customers," Ms Orr said this morning.
"Yes," Mr Comyn said.
Ms Orr asked if CBA was going to extend its remediation program to consider these customers.
"We certainly will consider these customers, yes, Ms Orr. I haven't had the chance yet to discuss this report," he said.
"I haven't had the opportunity to meet with (the authors) yet and go through that but, yes, of course, we will consider EYs findings."
She again asked if the plan is to extend the remediation program to cover these customers.
"If it is necessary, yes," he said.
Mr Comyn also told the commission that the nation's biggest lender has not always had the right leaders in the past.
He said the Commonwealth Bank was no longer a great Australian company.
"We're seen as a great Australian company, which we certainly many years ago once were, and it's very sad for people that, including myself, that we're not. That means a great deal to me."
Mr Comyn is the first bank chief to face the banking royal commission. It is sitting in Sydney this week.
His chair Catherine Livingstone will face the commission this afternoon.
Counsel assisting the commission Rowena Orr QC asked Mr Comyn bluntly if he felt that CBA has had the right leaders in the past.
"No," he said.
She asked if the bank had the right leaders now.
"We will see. I hope so," he said. "Well, it's obviously early days, Ms Orr, but I believe that - and I've certainly attempted to select people who I think will both challenge but will also work very constructively as a team."
"And of course I hope that I'm a good leader of the organisation overall, which I think will be judged by others very clearly."
At this morning's hearings he also said the bank had not finished paying back up to 90,000 customers who were sold problematic credit card and loan protection insurance. The problem was first detected in April 2016.
Asked when customers would be paid back he said: "As soon as we possibly can."
"I think in many cases, those delays are because we've preferenced precision and comprehensiveness, but it is - if you look at the average time to remediate customers where something has gone wrong, it's completely unacceptable."
He said it takes more than a year to pay people back after problems are found and it should take 90 days.
His comments come after former CBA chief Ian Narev told an executive who advocated shutting down problem insurance products that earned the bank about $150 million a year to "temper your sense of justice".
The man who confronted Mr Narev, was then retail banking boss Matt Comyn, who was dealing with revelations in April 2015 the bank had sold 64,000 customers credit card insurance they could not claim on.
Mr Comyn was made the bank's chief in April this year after Mr Narev left. CBA chair Catherine Livingstone is set to appear later today.
Ms Orr QC this morning lifted the veil on a "robust" one-on-one meeting with his former boss Ian Narev in which Mr Comyn advocated to stop selling the products.
Ms Orr presented meeting notes between the two executives, in which Mr Comyn said the bank should forgo the profits.
"From my perspective … at a group perspective, $150 million … sounds like a lot of money but from my perspective running the retail bank, which at that point we were generating more than $4 billion in profit. As I said yesterday, more than $10 billion in revenue,'' Mr Comyn told the commission.
He said Mr Narev did not accept the recommendation because the then bank boss genuinely "thought that the product was still relevant for customers".
The commission also revealed Mr Narev counselled Mr Comyn to "temper your sense of justice".
Ms Orr asked what Mr Narev meant by that.
Mr Comyn said he took it to mean "calm down" as he had previously been counselled to "better manage competing agendas" and "pick which battles" to fight.
He said Mr Narev was not telling him to temper his sense of justice for customers but was "referring to (that) I was enthusiastically pursuing my argument which I thought was right. And he was telling me to temper it".
Ms Orr asked how he felt about that advice. "I suspect I was slightly irritated by it," Mr Comyn said.
Mr Comyn said he did not believe the "primary divergence of views" between himself and Mr Narev was holding onto the $150 million a year.
Although he said the wealth management part of the bank, headed by executive Annabel Spring, was lobbying to keep the products and the subsequent profits.
"You were prepared to let that profit go as the head of retail banking services. You were prepared to relinquish that profit?" Ms Orr asked.
"Absolutely," Mr Comyn said.
The commission heard CBA handed the corporate cop - the Australian Securities and Investments Commission - a 'good governance notification' about the breach.
Ms Orr asked why the CBA did not submit a more severe "breach notice". Mr Comyn agreed this was a mistake not to do so.