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Andrew Thorburn, CEO of the National Australia Bank (NAB), testified on November 26 as part of the Royal Commission in misconduct in the banking, superannuation and financial services sectors.
The bank has already paid more than $ 100 million to compensate the victims of poor management of superannuation. But Commissioner Haynes has just started and the main bank managers are being targeted.
For a while, NAB customers received a "plan service fee" for a general council. But customers did not have a financial advisor connected to the account and did not receive any advice.
Even death could not protect customers who died from these commissions that were still charged to their accounts.
All this time, Andrew Thorburn was the CEO of NAB. Now address questions about how this could happen on your watch and why it has not been done before.
It is ironic that the man who fasted bitcoin as "unregulated" now finds himself responding due to the rampant lack of regulation within his own bank.
Do you think you're safe if you're not a NAB customer? Think twice: the Commonwealth Bank of Australia (CBA) did not get any better when it faced the commission on the collection of unreasonable taxes.
In one case reported by The Guardian, CBA continued to charge a deceased customer's account for more than a decade after their death.
Corporate responsibility, what is it?
"You know, [compensating victims] it was not an agenda item on a busy schedule, "NAB's CEO told queen's adviser Michael Hodge.
Mr. Thorburn was explaining to the lawyer because he, along with other bank managers, had not immediately responded to customer concerns:
"At the time, I do not think we saw it with the clarity that we do now."
But charge unsuspecting customers and the deceased? Most people would have the "clarity" to condemn such behavior without the suggestion of a royal commissioner.
About 60% of the recently deceased NAB superannuation clients were still accused of receiving nonexistent advice, along with thousands of customers who were still breathing.
"We are dealing with 85,000 customers. […] It was one of the most complex things we had to deal with, "explained Mr. Thorburn to Michael Hodge QC.
This did not impress Commissioner Kenneth Hayne, who defined the remuneration of 85,000 customers as a "big rather than a complex" task.
Although Hayne was not impressed, it seems that the NAB board was certainly – the 10-person commission made Thorburn rain with millions of dollar bonuses.
Apparently, the board of directors felt that adequate punishment for all this negative publicity caused by recent events was a slap on the wrist – to lower its salary to about $ 7.8 million.
Playing the Blame Game
An especially frustrating part of Thorburn's testimony was his anxiety to shift the blame for the executive decisions he took. This did not go unnoticed to the counselor of Queen Michael Hodge.
"It seems […] you are, to the maximum extent possible, passing the responsibility on to Mr. Hagger, the senior manager who was fired and left the bank. Is that what you're doing? "
The lawyer also reminds the Chief Executive Officer of NAB that any action taken by Mr. Hagger had to be approved by three bank executives, including himself.
NAB customers trusted Mr. Thorburn and his associates would look after their financial well-being. But in many cases, superannuation customers were being exploited – even from the grave.
"We did not want to be immoral"
Queen Michael Hodge's adviser also highlighted NAB's reluctance to comply with the laws regulating the compensation of victims.
He presented to the Commissioner a memorandum on the NAB that summarizes the FOFA regulatory commitment since December 2016.
The memorandum shows that an agreement was reached to distinguish between pre-FOFA and post-FOFA customers. This decision was proposed by the Director-General for Strategy and Regulatory Affairs and supported by the Risk Manager.
The document also discusses the potential loss of revenue and the high cost of compensation for affected customers.
"Was this the real problem?" Hodges churches.
"[Agreeing] Was an acceptable methodology with ASIC going to cost the business any more than it would have liked to pay? "
Mr. Thorburn is not on agreement. According to him, it was not "a sort of conscious or openly discussed question".
But in the unethical culture and dictated by the profit described earlier by Thorburn, this seems unlikely.
A model of zero responsibility
The case of Graeme Cowper, as outlined in an internal NAB report, exemplifies the toxic culture at play here.
In 2010 an ASIC violation report was filed by NAB after an internal investigation found evidence of file reconstruction and inappropriate advice from Mr. Cowper.
Instead of taking any serious disciplinary action against his employee, Mr. Cowper left the bank with a substantial payment and a job in the AMP.
This is likely because the NAB executives were complicit in its activities. For example, Mr. Cowper had a base salary of $ 80,000, but earned $ 850,000 a year in commissions – profits shared with the bank, according to the Australian Financial Review.
It seems that when bank executives can make an unethical income with their Australian customers, the financial burden of their paying customers is a small price to pay.
No place to hide
In the coming weeks, the royal commission will continue to bring unpleasant truths to NAB's attention.
Big bank executives circumvent financial regulations and put profits above customer satisfaction with almost impunity. So it is not surprising that, while confidence in financial systems decreases, the interests of cryptocurrency and bitcoins increase.
The first bitcoin users understood this before many others, and they were busy building a banking alternative based on verification and not trust. There are also flaws in this system (volatility for example) but the responsibility is easier to monitor on the blockchain.
And if this royal commission has demonstrated one thing, it is that there is a serious lack of accountability in our current banking system.
In the next week, the real bank commission will broadcast NAB's dirty laundry. And we will be here to refer to you. To track updates, sign up for our newsletter here.
