Whistleblower says parliamentary committee on banking 'just for show'
Jeff Morris, who revealed a scandal at Commonwealth Bank, also questions what donations banks made to the Liberal party
Jeff Morris, the whistleblower who revealed a financial planning scandal at the Commonwealth Bank, has described the Coalition’s plan to haul the banks in front of a parliamentary committee as weak and “just for show”.
He also questioned whether political donations had been made by the banks to the Liberal party at the election, saying “we won’t know whether the banks have made donations until February next year”.
“What I want to see is questions asked in a royal commission with resources to test those answers,” Morris told Guardian Australia.
“It was a weak leader in a weak government delivering a weak response. Banks will continue to be the tail wagging the dog as long as we have that situation with government.”
But Morris remains hopeful a bank royal commission will still go ahead, saying there were a number of Coalition members who supported the move. Bank campaigner and Nationals senator John Williams supports a royal commission and resources minister Matt Canavan supported it prior to his promotion to cabinet.
Responding to criticism that his government’s plans were inadequate, Malcolm Turnbull said some banks had cultural problems which in some cases put profit before customers’ interests.
Asked if the banks were being greedy, the prime minister told radio 3AW: “well that is a fair question and that is why what we need to do is encourage a stronger culture of accountability and transparency”.
“The fundamental cultural problem with banks is this,” he said. “Like any business, they seek to make a profit. Like any business, employees are rewarded by how much they contribute to the profit.
“But banks are different to many other businesses in the sense they are built on a foundation of trust and they advise their clients, they put their customers’ interest first and that is why the culture of a good bank is one where employees understand that they cannot put the profit ahead of the interest of the customers.”
A number of financial scandals in the banks have led to the calls for a royal commission, which is now supported by Labor, the Greens, Nick Xenophon’s NXT party and One Nation. NAB, ANZ and Westpac have faced rate rigging allegations. Asic is also investigating Comminsure – the insurance arm of the Commonwealth Bank – which has been accused of manipulating reports to avoid life insurance payouts to sick and dying customers.
Commonwealth Bank customers also lost millions of dollars after financial planners put their clients’ money into high-risk investments without their permission.
Bill Shorten agreed there was a widespread culture in the banks that put profits before consideration for the community.
“I think the CommInsure scandal amongst a range of scandals is the one that perhaps surprised me the most where you literally had people in a bank working out if you had an insurance policy, [whether] they could not pay the claimant on the insurance policy, even though the person with the insurance policy had been paying premiums,” Shorten said.
Shorten said the government could either wait “like the ambulance at the bottom of the cliff every time there’s a disaster” or move to address the problem.
New NXT senator Stirling Griff backed Labor’s calls for a royal commission into the banking sector.
“If we can have a royal commission into union corruption, we can have have one into banking,” Griff said.
“Too many people have been financially devastated by financial institution malpractice over the years and I would still absolutely like to see it happen.”
But Turnbull said when bank chiefs were deciding how much of the interest rate cut to pass on, they would be thinking about the annual committee appearance.
“There will be someone in the room, it might just be a little thought in your own mind that will be saying, you know, you better get this right because you will have to explain this to a committee of very grumpy [politicians], with a lot of television cameras, so you better get this right,” Turnbull said.
Labor and the Greens are still separately considering the best strategy to force a royal commission, given it cannot be done using legislation in parliament but needs to be established by the government.
With the final results clear in the senate and an increase in the senate crossbench to 11 members, Morris remains hopeful the support for a royal commission would ensure it would be established.
“Turnbull keeps saying he expects the senate to respect his mandate, well that senate has a majority of their own and as far as I can tell, every party supports a royal commission,” Morris said.
Notwithstanding the results in the senate, Turnbull said the Senate reforms, which changed the voting system to remove the minor parties “gaming the system”, were a success.
“The Senate reform absolutely worked because what we had before, as you know, was preferences being allocated behind closed doors on these very complex voting tickets that nobody knew, so what we have is a much more democratic senate,” he said.
Steven Munchenberg of the Australian Bankers Association said the current pressure on the banks should be seen in the context of the banks acting to change their conduct and culture.
“Many of the issues raised by the opposition leader around conduct and culture are being addressed by the industry reforms and some in Labor’s Fofa (Future of Financial Advice) legislation,” he said.
He also questioned whether political donations had been made by the banks to the Liberal party at the election, saying “we won’t know whether the banks have made donations until February next year”.
“What I want to see is questions asked in a royal commission with resources to test those answers,” Morris told Guardian Australia.
“It was a weak leader in a weak government delivering a weak response. Banks will continue to be the tail wagging the dog as long as we have that situation with government.”
But Morris remains hopeful a bank royal commission will still go ahead, saying there were a number of Coalition members who supported the move. Bank campaigner and Nationals senator John Williams supports a royal commission and resources minister Matt Canavan supported it prior to his promotion to cabinet.
Responding to criticism that his government’s plans were inadequate, Malcolm Turnbull said some banks had cultural problems which in some cases put profit before customers’ interests.
Asked if the banks were being greedy, the prime minister told radio 3AW: “well that is a fair question and that is why what we need to do is encourage a stronger culture of accountability and transparency”.
“The fundamental cultural problem with banks is this,” he said. “Like any business, they seek to make a profit. Like any business, employees are rewarded by how much they contribute to the profit.
“But banks are different to many other businesses in the sense they are built on a foundation of trust and they advise their clients, they put their customers’ interest first and that is why the culture of a good bank is one where employees understand that they cannot put the profit ahead of the interest of the customers.”
A number of financial scandals in the banks have led to the calls for a royal commission, which is now supported by Labor, the Greens, Nick Xenophon’s NXT party and One Nation. NAB, ANZ and Westpac have faced rate rigging allegations. Asic is also investigating Comminsure – the insurance arm of the Commonwealth Bank – which has been accused of manipulating reports to avoid life insurance payouts to sick and dying customers.
Commonwealth Bank customers also lost millions of dollars after financial planners put their clients’ money into high-risk investments without their permission.
Bill Shorten agreed there was a widespread culture in the banks that put profits before consideration for the community.
“I think the CommInsure scandal amongst a range of scandals is the one that perhaps surprised me the most where you literally had people in a bank working out if you had an insurance policy, [whether] they could not pay the claimant on the insurance policy, even though the person with the insurance policy had been paying premiums,” Shorten said.
Shorten said the government could either wait “like the ambulance at the bottom of the cliff every time there’s a disaster” or move to address the problem.
New NXT senator Stirling Griff backed Labor’s calls for a royal commission into the banking sector.
“If we can have a royal commission into union corruption, we can have have one into banking,” Griff said.
“Too many people have been financially devastated by financial institution malpractice over the years and I would still absolutely like to see it happen.”
But Turnbull said when bank chiefs were deciding how much of the interest rate cut to pass on, they would be thinking about the annual committee appearance.
“There will be someone in the room, it might just be a little thought in your own mind that will be saying, you know, you better get this right because you will have to explain this to a committee of very grumpy [politicians], with a lot of television cameras, so you better get this right,” Turnbull said.
Labor and the Greens are still separately considering the best strategy to force a royal commission, given it cannot be done using legislation in parliament but needs to be established by the government.
With the final results clear in the senate and an increase in the senate crossbench to 11 members, Morris remains hopeful the support for a royal commission would ensure it would be established.
“Turnbull keeps saying he expects the senate to respect his mandate, well that senate has a majority of their own and as far as I can tell, every party supports a royal commission,” Morris said.
Notwithstanding the results in the senate, Turnbull said the Senate reforms, which changed the voting system to remove the minor parties “gaming the system”, were a success.
“The Senate reform absolutely worked because what we had before, as you know, was preferences being allocated behind closed doors on these very complex voting tickets that nobody knew, so what we have is a much more democratic senate,” he said.
Steven Munchenberg of the Australian Bankers Association said the current pressure on the banks should be seen in the context of the banks acting to change their conduct and culture.
“Many of the issues raised by the opposition leader around conduct and culture are being addressed by the industry reforms and some in Labor’s Fofa (Future of Financial Advice) legislation,” he said.
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