<i>Illustration: Glen Le Lievre</i>

Illustration: Glen Le Lievre

It took far too long, but finally the Commonwealth Bank has been dragged - screaming and kicking all the way - to admit that it ripped off thousands of customers who had sought financial advice over almost a decade.

Not that the bank put it quite like that, of course. Thursday's apology from CBA chief executive Ian Narev was a masterpiece of corporate spin:  "Some people working for our Commonwealth Financial Planning and Financial Wisdom businesses [had]  failed in their primary obligation – to act in the best interests of our customers," he said smoothly.

It was rather more than that.  "Some people" had gouged their clients with ruthless deceit, encouraged by a CBA culture of rapacity and profit-taking above all else.   It was bank robbery, with the bank doing the robbing.  When Fairfax journalists, and later the ABC, began to expose this outrage, the CBA squirmed and fought to avoid the heat even as it pursued many of its victims to bankruptcy and beyond.  

 

Worse,  many of those "some people" are apparently still on the bank's payroll.  Narev made no mention of them being sacked or disciplined.  It's the bad apple theory that's inevitably trotted out by big institutions when this sort of skulduggery is exposed: a small handful of people let us all down, but now we've changed, etc.

To be fair, Narev has now set up what he calls the Open Advice Review Program to compensate the thousands who were screwed.   If it works properly - and that's a big if - the CBA will have to pay out very much more than the paltry $52 million ponied up so far.  The bank can surely afford it:  profit for the six months to last December was up 16 per cent, to $4.2 billion.

But what's really needed is a royal commission into the big four banks, the finance industry at large, and the abject failure of the supposed watchdog, the Australian Securities and Investments Commission, to protect investors.   An explosive report by a Senate committee called for that very thing last week, but the Abbott government brushed it off with the excuse that there's already an inquiry under way.

And indeed there is.  But it's headed by David Murray, who was the CBA's chief executive for 13 years until 2005, when the gouging had already begun.   That's a bit like asking the fox to investigate the blood and feathers in the henhouse.

 

This is not a government minded to upset the big end of town.  The Cormack Foundation, based in Melbourne, is a shadowy fund-raising arm of the Liberal Party, run by the usual Tory bluebloods.   It has substantial share investments in CBA, Westpac, ANZ and the NAB, bringing in big bucks. In its report to the Australian Electoral Commission for 2012-13, the foundation revealed it had paid $1,926,477 in bank share dividends to the Liberals, a nice little earner if ever there was one.     

No wonder Finance Minister Mathias Cormann is keen on FOFA, his so-called Future of Financial Advice "reforms".   If he gets them up it'll be easier than ever for the big four banks to sucker punch their punters.