SYDNEY: The final report of an inquiry into misconduct in Australia’s financial system will land with a thud at National Australia Bank’s headquarters.
It’s just not the size of the three-volume report, but the blast aimed at Chief Executive Officer Andrew Thorburn and Chairman Ken Henry, who testified during the Royal Commission’s final round of hearings.
“Having heard from both, I am not as confident as I would wish to be that the lessons of the past have been learned,’’ Commissioner Kenneth Hayne wrote in his report. “I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do.’’
The inquiry earlier heard National Australia employees accepted cash bribes to approve fraudulent mortgages in order to “smash’’ sales targets. The lender was also found to have charged fees for no service and then downplayed the extent of the problems to the regulator.
“I thought it telling that Dr Henry seemed unwilling to accept any criticism of how the board had dealt with some issues,’’ Hayne, a retired High Court judge, said. “I thought it telling that Mr Thorburn treated all issues of fees for no service as nothing more than carelessness combined with system deficiencies’’ even though the bank will pay out more than A$100 million in remediation.
In a brief statement, National Australia noted the release of Hayne’s report but didn’t respond directly to his comments.
Asked whether Henry’s and Thorburn’s positions were tenable in light of Hayne’s criticism, Treasurer Josh Frydenberg said that was a matter “for shareholders and for boards.”
Westpac Banking CEO Brian Hartzer also didn’t escape Hayne’s acerbic pen. Westpac is the only one of the big four banks to maintain some parts of its wealth business, and during his testimony, Hartzer said the Sydney-based lender still had “genuine disagreements’’ with the securities regulator.
“While I do not doubt Mr Hartzer when he says that Westpac has sought to ‘reset’ its relationship with ASIC, only time will tell whether that proves to be right,’’ Hayne said.
Matt Comyn, who took over as Commonwealth Bank of Australia CEO in April following a series of scandals that culminated in a record fine for systemic breaches of anti-money laundering laws, engendered some backhanded sympathy from the usually taciturn Hayne.“I was persuaded that Mr Comyn is well aware of the size and nature of the tasks that lie ahead,’’ Hayne wrote. “None of the other large banks have been confronted so directly’’ with conduct and compliance issues.
Shayne Elliott, who as CEO of Australia & New Zealand Banking Group has been the most conciliatory of the big-four bank chiefs, also escaped mostly unscathed. “I have little doubt that Mr Elliott is also well aware of the size and natures of the tasks that lie ahead.’’