Banking Bad: Whistleblowers. Corporate cover-ups. One journalist's fight for the truth. by Adele Ferguson

Author:Adele Ferguson
Language: eng
Format: epub
Tags: Non-Fiction, Politics, Economics, Finance
Publisher: ABC Books
Published: 2019-07-04T00:00:00+00:00

Part Two

A blast of sunlight

The royal commission names and shames

Chapter 16

Round 1: Consumer lending

The mortgage-broking rort

ON 14 DECEMBER 2017 Kenneth Madison Hayne AC, a former High Court judge, was appointed as the commissioner for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Hayne made it abundantly clear from the start that he had been given a strict timetable of twelve months to examine documents and listen to testimony before delivering a final report with recommendations on 1 February 2019.

There was nothing about Hayne’s legalistic, black-letter approach and his conservative leanings that would have challenged the banks’ expectation that they could ‘manage’ the commission. After all, they had asked for the inquiry and Turnbull had handpicked Hayne; some bankers even foolishly hoped Hayne would be sympathetic, given his father had been a banker.

With infinite resources – and a matching dose of hubris – the banks were confident they would be able to outwit Hayne by starving the proceedings of documents, supplying superficial submissions, requesting confidentiality on documents and, if all else failed, presenting voluminous quantities they thought would swamp the resources of the commission.

*

On 15 December 2017, Hayne wrote to sixty-one financial institutions, regulators and industry associations, asking them to describe any misconduct they had become aware of over the preceding decade and say what steps had been taken to fix the problems. The institutions were given six weeks to file their responses. But Hayne felt the replies weren’t comprehensive enough, so on 2 February 2018 he wrote to a number of the institutions asking for more detailed responses. It was a request that let the industry and regulators know that he meant business.

ANZ CEO Shayne Elliott went on the front foot with ANZ’s list, writing an accompanying two-thousand-word heartfelt reflection on the need for a royal commission, conceding that ANZ’s submission ‘shows we’ve had some significant failures over the last decade’. His letter gave off a sense of foreboding that misconduct previously unknown to the public would surface. ‘It would be easy to lay the blame on a few bad apples or to say that these are largely historical technical glitches resulting from large complex IT systems. That would be wrong.’1

Elliott added: ‘For me, it’s completely unacceptable that we have caused some of our customers financial harm and emotional stress.’

He also noted: ‘It’s often cited that not one bank depositor lost money during the GFC, but as [David Murray’s 2014] Financial System Inquiry found we know more than 80,000 Australians lost billions of dollars as a result of the collapse of managed investment schemes, poor financial planning advice and other misconduct.’

It was one of the few times the boss of a bank would publicly acknowledge what had happened in a sincere manner, before and during the royal commission.

Westpac showed either ineptitude or disrespect when it submitted its misconduct list then had to quickly amend it a few days later after realising it had failed to include some crucial episodes. Hayne noted his displeasure, later writing,

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