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BFCSA: Oops Banks royal commission: Banks miss first down-payment

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Banks royal commission: Banks miss first downpayment

The Australian 12:00am February 13, 2018

Ben Butler

 

Commonwealth Bank and ­National Australia Bank earned the wrath of financial services royal commissioner Kenneth Hayne on the inquiry’s opening day by telling him they cannot meet a deadline of 4pm today to provide full details about misconduct over the past five years.

Both banks intend to file as much as they can by today’s deadline but expect to have to file ­additional material later.

Opening the commission yesterday, Mr Hayne complained that financial services institutions had told him they needed more time to compile information about their misconduct, even though they had already made 50-page submissions about both misconduct and behaviour that did not meet “community expectations” stretching back to 2008.

His opening comments give some insight into how Mr Hayne intends to conduct the hearings, which have a tight one-year timetable given the broad scope of the review. Mr Hayne and counsel assisting him, Rowena Orr SC, outlined how the inquiry would work to an audience of lawyers, bank ­executives and financial services victims who packed one of Melbourne’s smaller courtrooms, forcing commission staff to open two overflow rooms.

Bank shares closed lower yesterday as the commission began yesterday.

A first public hearing, dealing with consumer lending including home loans, car loans and credit cards, is to take place next month.

The commission is charged with looking into almost all corners of the financial services industry, including banks, super funds and insurers, to uncover misconduct, and behaviour that failed to meet community standards. It must produce a final report by February 1 next year — a task Ms Orr admitted was “a challenge”.

Scott Morrison last night declined to be drawn on whether the government was open to extending the reporting deadline.

“It’s day one and I think commissioner Hayne has set out his clear determination to get cracking on this and get the job done and putting a bit of stick about and what he expects from them in getting their submissions in,” the Treasurer told ABC TV’s 730.

“I notice a strong determination to move through this in an efficient way.”

On December 15, the day after he was officially appointed, Mr Hayne wrote to financial industry participants to provide their initial 50-page confessions by January 29.

Yesterday, he said that on ­February 2 he wrote to the institutions again, seeking “more specific information about misconduct” from the past five years, by 4pm today.

“It has been said that the deadline cannot be met because of the amount of material to be reviewed and assembled,” Mr Hayne said.

“That a request for details of events of misconduct as defined in the terms of reference identified during the last five years cannot be met within the time sought, even though the initial request for that information was made approximately two months ago, is itself a matter to which further attention may have to be given.

“Whether it is will be a matter for debate at a later time.”

CBA has been the most ­scandal-prone of the big banks, with problems including financial ­planning scandals, disputes over life insurance claims, alleged rate-rigging and more than 53,000 ­alleged breaches of anti-money-laundering and counter-terror ­finance law.

CBA has already been ­allowed to file one 75-page confession, rather than the four 50-page documents the commission asked of it and its subsidiaries, which include financial planners, life ­insurer CommInsure and investment group Colonial.

It is believed the bank will ask for a short extension of time to file its additional submission.

“We welcome the opening statements from the royal commission and are working positively and constructively to meet its requests for information,” a CBA spokesman said.

“This is part of our responsibility and stated ­intention to be open, transparent and co-operative with the ­commission.” A NAB spokeswoman said the bank was “committed to fully ­­­co-operating with the royal commission and we are doing everything possible including devoting substantial resources to meet the timeframes of the commission’s ­requests for information and questions”.

Industry sources said Westpac had also been worried it might not meet today’s deadline for detailed additional submissions because the task was made more complex by subsidiary brands St George and Bank of Melbourne, but it is believed executives at the bank were yesterday confident it would file the paperwork by 4pm. Meanwhile, Mr Hayne also backflipped on a warning against financial services victims or whistleblowers breaching gag ­orders in submissions to the ­inquiry.

Last week, a commission spokesman told media that people who made submissions to the inquiry should avoid breaking any non-disclosure or non-disparagement clauses contained in agreements they had struck to settle disputes with financial services companies.

However, Mr Hayne yesterday said any institution that tried to enforce a gag clause against a person giving a submission faced “immediate consequences”.

“First, the commission would be very likely indeed to exercise its compulsory powers to secure the information in question,” he said.

“Second, the very fact that an institution sought to inhibit or prevent the disclosure of the information would excite the closest attention not only to the lawfulness of that conduct by the institution, but also to what were the institution’s motives for seeking to prevent the commission having that information.”

The move was welcomed by the Financial Services Union, which had been demanding employees be free to give evidence without fear of reprisal.

 

 

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