What the Commonwealth Bank hid from pensioners

Font Size:

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?

RELATED LINKS

ASIC chair addresses ‘trust deficit’ in financial sector

Financial services sector squarely in his sights.

Banks cop blast on deadline failure

Commission boss immediately on the front foot as inquiry gets under way.

Insurers asked to drop rules that protect profits

Call for insurance rule exemption that disadvantages policyholders to be dropped.

Written by Ben



SPONSORED LINKS

Sign-up to the YourLifeChoices Enewsletter

continue reading

Health

How to boost your gut health and immune system this winter

A healthy gut is key for overall health, and affects so much more than just our digestion. With links to...

Lifestyle

Things people who grew up in the '70s will remember

If your childhood or teen years happened to fall in the 1970s, you probably have a lot of fond memories...

Food and Recipes

The favourites that send food lovers pie-eyed

Pies, pies, pies. For some of us it's the flaky pastry and gooey filling. For others, it's the firm shortcrust...

Health

How much of a risk are microplastics?

Perhaps you've seen headlines saying we consume a credit card's worth of microplastics a week, or that microplastics have been...

Lifestyle

Friends, family and Aunty Maud

Columnist Peter Leith has always been one to take time to talk, lobby and observe. In this true short story,...

Podcast

Podcast with leading Melbourne podiatrist

They take you thousands of kilometres, but we probably look after our car tyres better than we look after our...

Australia

Travel SOS: When will cruising restart in Australia?

With the travel bubble between Australia and New Zealand set to reopen, will we see cruising restart earlier than expected?...

Travel

Air New Zealand's blueprint for post-COVID travel

Air New Zealand's trial a digital health pass on flights to Australia could be the blueprint for future digital 'vaccine...

LOADING MORE ARTICLE...