Ian Narev has vowed his bank won’t be embarrassed into paying compensation to those who don’t deserve it.
Commonwealth Bank of Australia boss Ian Narev has vowed he won’t be cowed by a swathe of negative publicity into paying compensation to undeserving dissatisfied customers who are being „unreasonable” and „trying to embarrass” the bank.
The boss of the country’s largest listed company made the comments in a wide-ranging speech in which he also sought to deflect attention from mounting calls for a Royal Commission into the banking sector, an issue shaping up as a major touchstone for voters ahead of an expected July 2 federal election, by urging politicians to focus on jobs growth and tax reform.
We need our people to do their utmost to minimise those cases… but when they do happen they need basic understanding and compassion.
CBA chief executive Ian Narev
However, by his own admission the „topic du jour” on Thursday, following the announcement on Wednesday that the government will deliver more funding and powers to corporate regulator the Australian Securities and Investments Commission, was ethics and culture in the banking sector.
Commonwealth Bank of Australia chief executive Ian Narev says he won’t settle lawsuits brought by unhappy customers who are ‘being unreasonable’ and ‘acting improperly’. Photo: Jesse Marlow
In a pointed aside from a speech filled with assurances that the bank was committed to improving its culture and acting „with compassion” when errors occurred, Mr Narev sought to assure shareholders that frivolous law suits would not be settled.
‘Unreasonable’ customers
„In some cases we have customers who feel dissatisfied because they are being unreasonable and because they are acting improperly with the Commonwealth Bank and because they hope they will embarrass us into settling in a way which no reasonable Australian would expect us to settle,” he said.
„In that minority of cases the right outcome is take the criticism, do the right thing, and stick by the rights of our customers and our shareholders.”
Mr Narev accepted that there had been genuine examples of intentional misconduct by CBA employees, as well as instances where consumers faced „poor outcomes” as a result of „overly bureaucratic processes”.
He said the bank was „very committed” to a raft of initiatives to improve its policies, processes and incentives to reduce the risk of this happening in the future.
„The vision of the Commonwealth Bank to help secure and enhance the financial wellbeing of people, businesses and communities,” he said.
„However it is inevitable the bank will have some bad relationships with some customers.”
Some loan go ‘bad’
Mr Narev said it was an „unfortunate but inescapable reality” of the inherent risks in a business model based on extending credit, managing investments and providing insurance that the bank would have some unhappy customers.
„If some of our loans aren’t going bad we are probably not lending enough … if when when markets go up and down some investments aren’t performing worse than people were expecting then we are probably not giving the right breadth of investment advice,” he said.
Mr Narev said that going forward the bank needed to encourage its staff members to minimise those cases and respond appropriately when they did.
„We need our people to do their utmost to minimise those cases … but when they do happen they need basic understanding and compassion,” he said.
„Compassion. Because when something goes wrong with a customer dealing with a financial services product it goes to the core of their wellbeing.”
Banks pledge reform
Mr Narev made the comments in a speech to the Australia-Israel Chamber of Commerce in Melbourne on Thursday.
It came on the same day that the Australian Bankers Association, of which CBA is the largest member, vowed to review its commissions structures and whistleblower policies.
Two former CBA employees turned whistleblowers, Jeffrey Morris and Dr Benjamin Koh, brought to light allegations of institutionalised misconduct that were central to Fairfax Media investigations into the bank’s financial planning arm in 2015 and insurance arm in 2016.
Mr Narev said neither Mr Morris nor Dr Koh were fired from the bank as a result of whistleblowing. Dr Koh has filed an unfair dismissal case against the bank.
Staff urged to ‘speak up’
He said senior staff had been urged to encourage all employees to „speak up” and new procedures including an anonymous phone line had been implemented.
He also used the speech to urge politicians to focus on jobs growth and tax reform, lamenting that „some of these issues” were being used as a „political football” in the election cycle.
„Don’t underestimate Australians, they are up for a sophisticated and informed debate,” he said.
„As an economy the number one policy discussion we need to be having is where will the next wave of jobs come from.”
Mr Narev lashed the Labor Party’s election promise to institute a Royal Commission into the banking sector as „baseless”.
