The Commonwealth Bank failed to act in the best interests of customers.
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.”
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?
Are you eligible for an Age Pension? Do you know your rights? The RetirePlanner tool has all the information you need.