What the Commonwealth Bank hid from pensioners

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A senior executive of the Commonwealth Bank (CBA) has admitted to the banking royal commission that the bank failed to act in the best interests of customers in relation to the sale of credit insurance.

CBA general manager of retail products Clive Van Horen told Commissioner Kenneth Hayne 64,000 credit card insurance policies were sold to pensioners, students and unemployed people, who were ineligible to make claims on the policies.

Under sustained questioning by Counsel Assisting Rowena Orr QC, Mr Van Horen finally conceded: “It was a breach of our obligation to act honestly, efficiently and fairly.”

The CBA executive admitted those purchasing the insurance would have had to be employed to claim on the policies.

Mr Van Horen also admitted that the bank had dragged its feet in reporting the issue to regulators when it was discovered.

He said the bank pushed sales of the policies by offering staff bonus awards of iPads, iPhones, JB Hi-Fi vouchers and payments to staff social funds.

Finance Sector Union National Secretary Julia Angrisano said it was bank workers’ jobs at stake and not iPads or iPhones.

“The toxic sales culture at CBA … permeates down from the remuneration structures of the CEO and senior executives,” Ms Angrisano said.

“Pay models and incentives linked to the sales of financial products is pushed by management in every customer interaction,” she said.

“The employment of CBA bank workers is subject to meeting targets.

“Many of our members have expressed the concern they feel as they are required to either sell inappropriate products to customers, who they know doesn’t need or can’t afford them, or alternately, jeopardise their employment by failing to meet these targets.

“We hear often from workers who are under constant scrutiny and pressure about the levels of sales targets imposed on them.

“There is a constant threat of being placed on a performance management program which can result in a worker losing their job because they did not sell enough debt related products.”

Opinion: Banks appear to be taking advantage of older Australians

We are only into the second week of hearings at the banking royal commission and the early signs point to older Australians being among the chief victims of the big four banks.

The Commonwealth Bank’s admission that it sold useless credit card insurance policies to pensioners who could not claim because they did not work 20 hours a week or more, was bad enough, but its failure to alert regulators was just as bad.

This week’s hearings also revealed some shocking practices by ANZ.

The banking royal commission heard that ANZ had under reported the monthly expenditure of a pensioner applying for a home loan by a whopping $1800 a month.

The man concerned, Robert Regan, detailed the bank’s action in a witness statement. The incorrect information was given to the bank in an application made by a mortgage broker.

The commission heard that, had the bank examined his bank statements properly, the inconsistencies would have been evident.

The worst thing is that these revelations feel like just the tip of the iceberg. The big four banks have had some serious managerial and moral problems for a long time and it will take a long time to get to the bottom of everything.

The royal commission only has until February next year to hand down its final report. With the amount of information uncovered so far, in just two weeks of hearings, it is remarkable that the Government fought the idea of a royal commission for so long.

What do you think? Are you shocked by the royal commission revelations? Do you think there is worse to come? Do you have anything you would like the commission to investigate?

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Written by Ben

95 Comments

Total Comments: 95
  1. 0
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    Yes, but is it as bad as both Liberals and Labour. Shortens current attack on retirees bank divident rebates, and Hockeys changes to the assets test that destroyed the retirement plans of an estimated 540000, those who worked and saved and also called disabled rorters whilst he himself was rorting the travel allowance several multiples of $288 PN. Then Turnbull announced he was going to reinstate the Pensioner Concession card but it turned out to be another lie and we are told the wealthy are being taxed whilst it is the working middle class that is being targeted and Julia Bishop is handing out hundreds of millions in foreign aid to Muslim countries. Yes the banks are acting unscrupiously but nothing like compared to our Government

    • 0
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      All that’s true, Mike, but unfortunately people vote them back in at every election.
      What’s that saying? “The definition of insanity is doing the same thing over and over again, but expecting different results”. There seems to be a lot of insanity about at election times.

    • 0
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      mike and Triss….No member of parliament wants to propose bank regulations because they all have their noses in the trough.

    • 0
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      Good comments, mike and Triss. This culture of Greed is Good will never change until the monetary incentives from large Bonuses of senior management & CEOs is stopped (replaced bib small bonuses for achieving KPIs, not including Company profits, but including Customer Satisfactioon through independent surveys).

      All, Retirees in particular, need to open their eyes wide and vote all seat-warmers from Liberal, Labor and Greens out by putting them last in preferences, and vote for the best locally available alternative.

    • 0
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      Labour is the U.K. or New Zealand party. Here it’s Labor.

  2. 0
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    The Banking fraternity has been for a long time in a field of their ownm. They think that the whole world relies on them for some reason. Yet the local milkman and greengrocer who gave us credit in the old days, never treated with arrogence, nor looked down on us if we were a bit late in repayments. But the Banks did,do. What gets into these ‘wonkers” mindset, to be such a group of “hallow am I” attitude. My Dad once said ” try to avoid borrowing frm banks as they will twist your arm for the slightest reason”. He weas right too, but these days we need a system that lends money so that industry can expand and people can purchase homes. The problem is that the Bank’s mindset is so entrenched with arrogence that they fail to change. We need a more transparent lending system, where borrowers are checked before they get in “over their necks”, and by an independent scrutineer who is legally liable for any stuff-ups. The banks will then need to clean their act up.

    • 0
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      They’ve gotten into that position via self-regulation and via convincing governments that they are ‘too big and too important to fail’, and thus they operate in full awareness that if they do fail the government will bail them out with your money.

      Historically during the GFC, US banks went cap in hand to the government to get billions, and a hell of a lot of that went into executive’s bonuses – yes – the same people who brought the bank to that parlous state.

      Here our ‘government’ of two parties has deemed that in the event ‘our’ banks are run into a wall, all those unsecured creditors such as account holders and most likely super holders, will pay first or be last on the list for any cash handout.

      The fearful Gordon Gecko potential exists, in that, for the bank executives to deliberately run into a wall so they can simultaneously pick up billions of taxpayer funds, refuse account holders, and possibly even refuse shareholders, not way staff, etc, while their ‘executives’ and ‘board members’ scurry off with billions in traditional Business Breakdown Derby.

      Truly in this day and age we, the ordinary people, are more and more at the mercy of robber barons promoted by poor government.

  3. 0
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    So…..who goes to PRISON? No one, it will just end up in a Whitewash…!

    • 0
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      Slap on the wrist, sent home on ‘stress leave’ at full salary, then handed a ‘mortgage buster’ package to get out and start again, maybe in a new position with the same group.

      SNAFU.

  4. 0
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    Being a former bank employee of many years, I can attest that the sales culture, and its relation to staff bonuses, was a complete failure as it promoted rorting which led to ” fudging of results, ” and selling unwanted and unneeded products to get higher bonuses.
    Todays article is completely correct and it made working in the bank an unnecessary pressure job that I was glad to leave, which was unfortunate as I enjoyed my career up until the new sales culture began.

    • 0
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      I retired early from the bank, after 30 years, because of the sales targets we had to reach. People having to sell to customers they knew did not need the products just to get business. I didn’t always get a bonus because I put my customers first, but I have morals.

    • 0
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      Ditto Garry. I was an employee of the CBA for 40 years and I agree wholeheartedly . I also can attest to the “Sales Culture” with pressure put on many Lenders to push their figures and achieve better results and of course then they would the ones who got all the praise and bonuses.
      In the end like Garry I was glad to leave

    • 0
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      Yes Garry. When we had a bank here a few years back the hard sell and desperation in tellers eyes whenever you had to go into the bank was disturbing. I felt really sorry for those tellers. They are all redundant now as the bank doesn’t exist any more.

    • 0
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      Where is the bloody union shouting at the top of their voices about such pressure on employees? The FSU talking about it now sounds pathetic given that they are supposed to be a powerful union. Only designated Sales people should be asked to push sales (and get commissions). Did all of you (except Rae) complain to your union?

  5. 0
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    Why the surprise……Turnbull is an ex Goldman Sachs’s protege, banker, if you don’t understand the implications of that……………….

    • 0
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      So this all started under Turnbull’s stewardship did it? I you look at some of the comments these rorts have been going on for at least 40 years, so it hasn’t all of a sudden happened under the LNP at least it’s being investigated now, even if it was forced on the government.

  6. 0
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    a) the massive bonuses to its execs
    b) squirreling off dishonest advisors into a comfy retirement on ‘stress leave’/cash for life
    c) the money that those wholost could recover
    d) all of the above…

    For Wun MILLYUN Dullahs…. which will it be?

    Umm … I won’t hesitate here, Eddie – lock in d)….

  7. 0
    0

    Recently I went to Westpac to resolve a couple of issues when I was confronted by a young manager who did his best to con and pressure me. What he was saying was obviously a lie and I told him I would take my business elsewhere and everything was suddenly resolved. I also went to CB where I could not get information on one of their products , she actually refused to give it to me and suggested I go to one of their financial advisers. I expect so I could be properly fleeced, which I refused. The behaviour at both banks was dodgy at best, I expect these young bank employees thought I was stupid just because I have grey hair, there also appeared to be an undercurrent of real dislike for baby boomers as if we were responsible for all their problems. Even some jealously.

    • 0
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      Try being a woman Tib.

      I became totally invisible around the age of 60. I’m seriously thinking of using that invisibility to rob stores blind if I ever need to.

    • 0
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      Sounds like a buzz and I can’t wait to see a video of the process Rae, suggest you take a seeing eye dog to save yourself from injury.

    • 0
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      Rae I understand you think the male experience is somehow better, women often do but trust me they are no more intimated by me than they are by you. Also the second bank employee to try and rip me off was a woman and of the two she was the most aggressive. Banks will happily try to rip us both off, there’s equality for you 🙂 By the way if you work out the invisibility think count me in. Lol

  8. 0
    0

    Libs and Labor attacking retirees now the banks, New Zealand is looking good.I have had a gut full of this place run by a bunch of greedy crooks that do as they like.Think long and hard at the next Federal election and send a protest vote to both major parties.

    • 0
      0

      Always planned to, floss… again I will not be voting for any of the majors.. and that currently includes ON, since they flip-flop between public utterances and real action in the house… say one thing then vote for another.

      The Greens are increasingly siding with the Liberals to ‘get’ their constituency opponents – Librador – so their clear self-interest and striving for power at any cost to morality and ethics is clear.

      Never voted for them anyway, but they are becoming more clear with each day.

    • 0
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      TREBOR they are so corrupt now the distribution of votes is even suspect.

      I’d like a Resistance Movement and a way to join it.

      We need a Senior’s Assembly with it’s own candidates.

    • 0
      0

      I am perpetually left wondering if the whole thing is rigged – the voting public of this nation could not possibly be so stupid as to continue to vote in these losers.

    • 0
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      “The voting public of this nation” – are, and will “continue to vote in these losers” – after all, unless Rae can implement her scheme (not the bank job) what alternatives exist. Not the other “losers” surely ?

    • 0
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      Unfortunately, the only solution to entrenched and systematic abuse of power and long term stuffing things up to benefit mates etc, is an extreme form of control by someone of good ethics and values.

      We all know where that leads….. only a strong hand can force the untangling of all the rubbish that is in play at this time….. but Ein Reich, Ein Volk, Ein Fuhrer doesn’t cut it these days…

    • 0
      0

      Maybe an Australian Trump – but less Business-benefits-focused?
      Voters have to throw out the current trash from all the major parties. Otherwise the culture will not change – with no incentives for the pollies who are taken care of so well.
      Somehow the word needs to be spread better (beyond YLC) that people do have power through their votes.

    • 0
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      Benevolent diktator…. who knows… someone always holds a grudge and has him/her assassinated………

    • 0
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      floss – if voting could change things as they are I am sure it would be illegal!

  9. 0
    0

    This big business focussed Government is run by a banker. No surprise that it tried to protect the banks until it was forced into this limited enquiry. There is no way that it can do a proper job in the time allowed.

    The Liberals do not and never have cared about pensioners.

    • 0
      0

      And you think Mr Shorten & Co do?

      Where have you been for the last few days?

    • 0
      0

      Please remind us – total $ annually, how much is the social cost for age pension/pensioners ? Nobody cares ? Beware, reality bites and reality has only just begun to flex it’s muscles.

    • 0
      0

      ‘social cost for aged pension/pensioners’… hmm – that’d be a net nil due to the reality that it was paid for before they got OAP, over fifty working age years of tax contribution (etc)….

      I’ve said many times – and it needs to repeated over and over again with fierce conviction – ALL aspects of government spending are in the same basket, and NONE should be singled out when it has already paid its way.

      I also listed yesterday certain GENUINE welfare payouts being handed around by our ‘government’ of two parties, all of which add up to one hell of a lot more than aged pension does…. and that doesn’t even include ‘corporate welfare’ that is handed out with gay abandon in the fervent hope that one day the Frankenstinian Monster of Trickle Down will rise and live….

      “He lives.. my creation lives!”….. don’t think we’ll be hearing that any time soon.

  10. 0
    0

    I agree that the banks’ actions have at times been unconscionable, but whatever happened to the principle of Caveat Emptor? If OAP’s sign up for this stuff from banks, what other ridiculous deals are they doing at petrol stations, supermarkets and hardware stores? A cynic might query whether the Age Pension is too generous, if oldies are going to sign up for these products without proper investigation.

    • 0
      0

      That’s why we have a need for safeguards, BA…. and precisely why unrestrained capitalism etc is not permitted in any sane society.

      There’s more to life than a little bit of money, you know…

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