4 February 2019
4 February 2019
ANNA BLIGH: I want to start this afternoon by acknowledging the rigour, hard work and diligence that Commissioner Hayne and his team have brought to their task. And I want to thank all those customers who brought their own personal experiences to the Commission. It is their courage that underpins today's report.
This Royal Commission has put the entire banking sector under the microscope, and its final report lays bare how banks have too often failed their customers and let down the Australian people. Banks understand that these failures have caused deep hurt, suffering and heartache for far too many customers, and they are sorry for the pain that they have caused. Importantly, banks accept full responsibility for these failings and they know that they must now change to ensure that this never happens again. Banks are determined to learn the lessons, to fix the problems and to make it right. Australians expect better from their banks, and more than that, they deserve better.
Today's report contains some very tough medicine for banks, including potential court cases. With 76 recommendations, it represents a huge overhaul and top-to-bottom reform of banking and finance in the country. It will make changes to what financial services and products can be offered, how staff are paid, what sort of penalties there'll be for wrongdoing. There'll be new offences for a range of activities, and importantly, new rights for customers. The industry is determined to get on with the job of fixing the problem. To that end, it has already formed a special taskforce to begin the work that will be needed to get this job done.
The industry sees this report as a roadmap. It is a roadmap to drive the change that is needed to earn back the trust of the Australian people. Today is an opportunity for banks to reset their relationship with their customers and with the Australian people, and banks are determined not to miss that opportunity. I could understand, in the circumstances, that many people may be cynical about whether banks will change. To those people I would say: don't judge banks by their words, judge them by their actions in the coming weeks, the coming months, as they implement this report.
QUESTION: No individuals were named for specific criminal proceedings and many have seen this as not as harsh as expected. Have the banks gotten away with this in this final report?
ANNA BLIGH: There are a substantial number of referrals by the Commissioner to the appropriate authorities for matters which the Commission believes there's evidence that requires the attention of those Authorities, potentially, for some form of action. So I don't- I think if you go and have a look at all of the matters that have been referred by the Commission to the relevant authorities, you'll see that he has- hasn't pulled any punches yet.
QUESTION: Anna, why has it taken a Royal Commission for the banks to acknowledge they've been treating their clients exceptionally poorly and to promise to change their behaviour?
ANNA BLIGH: I think one of the things that a Royal Commission brings to whichever area that it turns its attention is a great deal of sunlight, and sunlight has always proven to be the best disinfectant. It's when an industry or an area of activity sees its own behaviour through the lens of somebody else – in this case, a Royal Commission and through that Royal Commission, the eyes of the public – that it really starts to understand how behaviour that seemed quite normal and industry practice is in fact anything but.
QUESTION: Can you just talk a little bit about the banking code, because obviously Hayne's recommendations called out some inadequacies there and some changes that he would like to see there. The government has said they would urge the ABA to take on those changes. So, I mean, what's your response to that today?
ANNA BLIGH: The banking industry welcomes Commissioner Hayne's recommendations in relation to the Banking Code of Practice. He has recommended a number of things, including that some parts of the Code, and indeed other industry codes in other parts of the sector, should have some provisions that are enforceable. The banking industry welcomes that. We have always regarded the Code as enforceable and if it's enshrined- if those appropriate parts are enshrined in law, that will put beyond any doubt the rights of customers and their entitlements.
QUESTION: So you intend to move forward …
ANNA BLIGH: Yes.
QUESTION: … on all of those?
ANNA BLIGH: Yip.
QUESTION: Can banks be as profitable under this new regime?
ANNA BLIGH: I've always believed that it's a false dichotomy – to believe that treating customers well and treating the customer as well as you possibly can somehow comes at the expense of shareholders and their interests. I think in any business – whether it's banking or any other business – the better you treat your customer the more you are likely to succeed, to grow, to make a profit and return something to your shareholders.
QUESTION: Our leaders are very keen to see that banks keep lending. Are we facing any risk of a greater credit squeeze in [indistinct] of this report?
ANNA BLIGH: Banks were very concerned that there may be recommendations that would see lending practice tighten up, and therefor perhaps put pressure on the flow of credit into the economy. That is the one area where the Commission has recommended that there doesn't need to be further action, and so I think that's very, very important. There is no doubt that you've got to get the balance right between looking after customers, making sure you don't lend them money they can't afford; but not being so tight that you end up restricting credit into households and into small business and into the economy generally. So I think the Commissioner has found the right balance in that regard.
QUESTION: Does the ABA support the changes the Commissioner has proposed to mortgage brokers?
ANNA BLIGH: This is a comprehensive report and it's very, very detailed, with 76 recommendations. We've only had a chance to look at this for about three-and-a-half hours. On the face of it, I think it represents a comprehensive overhaul that will bring many, many, many improvements to customers. There are some recommendations that we'd like to take the time to look at in more depth to make sure that they are in the best interests of customers. And one of those is in the area of changes to mortgage broking payments. I think the Commissioner has been very concerned to make sure that we minimise conflicts between how mortgage brokers are rewarded and the best outcomes for customers. But I think there is some very radical suggestions here that need some very careful thinking before they are rushed into.
QUESTION: What do you think about the Government's decision not to let the banks themselves have an early look at this before the report was published? Have you had any explanation for that in [indistinct] review?
ANNA BLIGH: Well, I think there's a lot of interest in this report. The Government made its own decision about how it would release it. It's now in the public arena, it's fully available. I haven't counted the pages, but it's three volumes. It's a very weighty tome. And I think banks will now welcome the opportunity overnight to look at it more and in the coming days.
QUESTION: Were you surprised by what Commissioner Hayne had to say about Dr Ken Henry and Andrew Thorburn, perhaps not accepting as much responsibility as they should around the Commission and the entire process?
ANNA BLIGH: I know that the Commissioner took a great deal of care when he cross-examined CEOs during the final hearing. It's not surprising that he may have expressed his owns opinions on that. What I know is that the leadership of Australia's banking industry accepts total and full responsibility for the failings, and much more important, accepts the full responsibility to fix them.
Let me be very clear: banks are determined to learn the lessons, to fix the problems, and to make it right. And every part of the industry is as committed to that as any other.
QUESTION: How would you describe the tone of the recommendations?
ANNA BLIGH: What we've seen from today's report, I think, is a massive overhaul of the banking and finance industry in Australia. Whether it's banking, superannuation, insurance, financial advice, any other part of the sector. There is no stone that has been left unturned by Commissioner Hayne; 76 recommendations, a huge overhaul, big reform, top-to-bottom. This is something that will, I think, put Australia in a very, very good position to deliver the sort of banking system that Australians deserve.
QUESTION: Any criticisms of it – that you don't like?
ANNA BLIGH: No. I think it's been very, very comprehensive, very rigorous, very thoughtful. As I've said, banks will now have a look in much more detail and give some thought to how some of those things might play out before finalising their formal response. I know the Government's had three days- I think we need to have a look at it for at least a couple of days. But no, I think it's been- I don't think that Commissioner Hayne has pulled any punches with this report. He has been very full and frank in his assessment. He hasn't shied away from saying the difficult things and he hasn't shied away from some very big reforms.
QUESTION: You said that …
UNIDENTIFIED SPEAKER: [Talks over] One more question.
QUESTION: … Australians going forward should be judging banks by their actions and not their words, but just how long do you think it's going to take to win back that trust?
ANNA BLIGH: Banks are under no illusions that they have a very big job ahead of them to earn back the trust of all Australians. And they will earn that trust by being trustworthy. And that means implementing all of these recommendations, getting on with those reforms that the Government's already put in place, and getting on with the reforms that the industry itself has been working on. This is top-to-bottom reform, and top-to-bottom reform that is going to be in the interest of Australian banking customers and the Australian public, and importantly, the Australian economy.
UNIDENTIFIED SPEAKER: Thanks everyone.
Access to credit opens up opportunities and fulfills aspirations. Getting it right requires the right balance between consumer protections and the flow of credit.
Interviewed by AM’s Peter Ryan, ABA CEO Anna Bligh talked about the substantial drop in loan deferrals since their peak during the pandemic, falling from 900,000 to 300,000.