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The banks haven’t learned their lesson

Lachlan Maddock
— 1 minute read

On the one-year anniversary of the release of the royal commission final report, it seems that little has changed. 

In 2017, Australian Banking Association CEO Anna Bligh told the National Press Club that banks could suffer reputational damage from being associated with an inquiry that lacked “any real substance or evidence”. 

“They have faced the scrutiny now of more than 37 reviews, investigations and inquiries,” Ms Bligh said.

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“The reputational damage that is done to our finance system has a ripple effect on consumers. If you care about customers and consumers, you should think about that.”

Two years later, Ms Bligh had changed her tune. Last November, Ms Bligh told the standing committee on economics that the royal commission was an “excoriating process” for Australian banks and that, despite her earlier protests, “sunlight is a very powerful disinfectant”. 

But a year after the royal commission’s final report was released to the public, it seems that little has really changed. 

The final months of 2019 were dominated by a fresh wave of banking scandals, some of them larger in scope than those that were aired during the royal commission. The most damning of those scandals – which included a fresh fee-for-no-service case against NAB – were AUSTRAC’s allegations that Westpac had breached anti-money laundering law 23 million times while inadvertently facilitating child sexual abuse in the Philippines. 

The allegations were met with shock from the general public – and casual disregard from Westpac. CEO Brian Hartzer told the bank’s board that the allegations were “not playing out as a high street issue” and that “for people in mainstream Australia going about their daily lives, this is not a major issue so we don’t need to overcook this.” 

While those remarks might have been what forced his resignation, the fact that he made them speaks volumes about the landscape of the c-suite at Australia’s banks almost a year after Ken Henry and Andrew Thorburn were singled out for criticism in commissioner Hayne’s final report. Bank chiefs are mostly insulated from the consequences of their failures; they might take a hit to their remuneration, or be forced to resign, but the only thing they really have to contend with is a fall from grace – one that’s usually arrested by a golden parachute. 

And so far, there is little evidence that the sweeping cultural changes that need to happen at Australia’s biggest banks have happened. In 2019, MP Andrew Leigh noted that a NAB internal survey showed that around a quarter of staff reported that they feared retribution if they reported unethical conduct. The survey also asked participants whether they agreed with the statement “people who deliver strong results aren’t excused from the rules”. Only 25 per cent agreed. 

The culture of indifference that permeated every level of Australia’s banks – the culture of indifference that that made the royal commission necessary in the first place – is being allowed to fester. While sunlight might be a powerful disinfectant, it’s still unclear whether the worst parts of these organisations have truly been exposed to it.

 

The banks haven’t learned their lesson
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