Australia's banking inquiry is devastating. But would NZ fare any better?by Bernard Lagan
Four of the biggest banks taken to task in Australia also operate in New Zealand, yet the Reserve Bank governor sees no need for an inquiry here.
They rubbished calls for the investigation until pressure from MPs forced their hand late last year as a clutch of journalists, led by the Sydney Morning Herald’s Adele Ferguson, kept exposing how the banks’ financial advisers were vaporising the life savings of the vulnerable.
The owlish, slightly built former High Court judge Kenneth Hayne, picked to lead the inquiry, might have been expected to oversee a colourless, if not odourless, probe. He did the opposite. The lawyers and investigators Hayne assembled gained the ammunition to blowtorch bankers, with results including one collapsing in the witness box, others instantly destroying their careers and some becoming so snared in self-serving corporate obfuscation that wells of derision have bubbled up from the audiences.
When AMP’s hapless head of financial advice was asked why the policy to charge clients fees for no services was described by AMP as a mistake – when it wasn’t – he replied, “I think its shows a culture that is not as robust as it should be.”
So vast is the bankers’ habit of gouging fees for services customers never get that AMP and the four biggest banks – ANZ, CBA, NAB and Westpac – have agreed to pay 306,000 customers combined compensation of more than $216 million.
Among the admissions from bankers that have rocked the royal commission’s public hearings:
- A Commonwealth Bank financial advisory business continued to charge fees to customers they knew had died, including one instance where fees were charged for more than a decade.
- The same bank said it would boost 30-year-old roofer David Harris’ credit-card limit by thousands of dollars, adding to his existing debt of more than $27,000, after he told the bank he was a problem gambler.
- Banks sold credit-card payment protection policies to 64,000 people, many of them jobless, who could not claim on the product.
- National Australia Bank staff approved loans they knew were based on fake documents in order to “smash targets” and score bonuses.
Mercifully, Hayne’s first report is free of jargon and hedging. “Why did it happen?” he wrote. “Too often, the answer seems to be greed – the pursuit of short-term profit at the expense of basic standards of honesty. How else is charging continuing advice fees to the dead to be explained?”
The banks, he said, ignored the risks to their reputations, and when shonky practices were exposed, made apologies and promises to do better – and did little else.
New Zealand regulators appear satisfied that what happened in Australia has not been replicated across the Tasman – despite Australia’s four biggest banks holding about 90% of deposits in the New Zealand financial system. “Why search for a problem yet to be identified?” said New Zealand’s Reserve Bank governor, Adrian Orr, airily dismissing the Australian inquiry in April. “I don’t see any lack of confidence in banks in New Zealand.” A week later, he asked the banks to demonstrate how they differed from their Australian parents.
Neither Turnbull nor Morrison saw any banking problem in Australia – until a dogged journalist and unflinching judge showed where the banking regulators either failed or were too scared to look.
Certainly, the banks weren’t going to tell them. And they sure didn’t tell Orr’s banking watchdog counterparts in Australia.
New Zealander Bernard Lagan is the Australian correspondent for the Times, London.
This article was first published in the October 13, 2018 issue of the New Zealand Listener.
Weight-loss surgery is becoming more common, but lifestyle and attitude changes are needed for long-term success.Read more
Māori food champions Kasey and Karena Bird share traditional family recipes that are ideal for Matariki.Read more
The MP made world headlines when she cycled to hospital to give birth. She talks about how this put her and what she stands for in the spotlight.Read more
The fourth Toy Story instalment is clever, enjoyable and refreshingly weird.Read more
In the wake of data-privacy scandals, Apple is beefing up protection for owners of its devices.Read more
We are pretty good about paying our taxes here, so why would we willingly go along with avoiding GST?Read more
New Zealand retailers hit by a GST rort that has been going on for at least two years hope officials, Trade Me, ministers and even customers will...Read more