Since the end of 2016, the Big Four and AMP have been under scrutiny for incorrectly charging customers for financial advice. Over 50,000 Commonwealth Bank customers were affected, and CEO Ian Narev stated that no top bankers were complicit in the scandal. That's according to a report from The New Daily on March 7.
No top banking officials from the Commonwealth Bank have been fired or penalised in any way.
Mr Narev was questioned by Liberal chairperson David Coleman about who was responsible for the major error and the slip in banking protocol:
"Okay, so, wealth management, CommInsure, rate rigging – no consequences for any senior executives?"
Mr Narev simply replied "correct".
Since the scandal was uncovered, no top banking officials from the Commonwealth Bank have been fired or penalised in any way, despite the bank paying more than $100 million in compensation to 50,000 customers, and a further $23 million to 1,800 customers who were given poor, potentially costly financial advice.
Why should the Big Banks penalise their officials?
People in positions of power are the ones who make the decisions at banks – it's no different for small or big banks. However, when something goes drastically wrong, or banking practices are not followed, it's not because the tellers and the branch workers purposely tried to con people out of money. It's because of poor advice from the top, or a lack of training and protocol.
In the case of CommBank, the fact that more than 50,000 customers were negatively affected means that someone in a top position should have seen the error, or noticed that something wasn't right. There should have been someone (or multiple people) who put their hand(s) up to take the blame. However, there was not.
How could CommBank be punished?
In a separate report from The New Daily on March 7, potential sanctions CommBank could face are outlined. For one, a Royal Commission could be convened to get to the bottom of who was responsible for the scandal. Mr Narev said that a Royal Commission would damage the reputation of the banking industry in Australia, however:
"The message that the convening of a Royal Commission would send about policy makers over the last decade, regulators over the last decade, bank management and governments over the past decade would not be positive for the industry, would not be positive for strength and would not be positive for the perception of our industry as unquestionably strong."
It might be time you switched to a bank you can trust – a customer-owned bank. Get in touch with the team at CAPE today to find out more.
