Commonwealth Bank and Bankwest acknowledge the report from the Parliamentary Joint Committee inquiry into the impairment of customer loans.
We welcomed the opportunity to appear before the Committee on a number of occasions, as well as provide detailed responses to every question that the Committee has asked of us.
A number of the concerns raised throughout the inquiry relate to CBA’s acquisition of Bankwest in 2008, with all of the customer loans presented to the Committee written prior to this. This acquisition took place during the GFC, a volatile time where Bankwest went close to collapsing and where many other businesses suffered financial hardship.
The findings of the report puts to rest once and for all claims about the deliberate impairment of loans by Commonwealth Bank, a similar finding echoed in previous inquiries and multiple court cases.
Many of the recommendations raised by the Committee to address consumer concerns are already being implemented voluntarily by CBA, Bankwest and the broader banking industry. The recent announcement from the Australian Bankers Association (21 April, 2016) introduced comprehensive new measures to help protect consumer interests, and shows action already being taken on many of the Committee’s recommendations.
Specifically, the industry is supporting the broadening of external dispute resolution schemes (Point 2: Making it easier for customers when things go wrong) and increasing eligibility threshold, a key concern of Committee. The Government’s recent announcement strengthening ASIC also included an immediate review of the Financial Ombudsman Services small business jurisdiction, with a new independent expert panel to lead this review appointed today by Minister for Small Business and Assistant Treasurer Kelly O’Dwyer.
We welcome these proposed changes to provide customers, such as those who have provided evidence to the Committee, with an external avenue to raise claims.
In addition, the industry is supporting a review of the Code of Banking Practice (Point 5: Strengthening our commitment to customers in the Code of Banking Practice), to enhance best practice banking standards, disclosure and principles of conduct, helping address concerns about banking conduct. This review is already in progress.
Finally, the industry has also commenced an independent review of product sales commissions with a view to remove or change them where they could lead to poor customer outcomes (Point 1: Reviewing product sales commissions). Again, this is a recommendation of the Committee which is already being implemented.
We do acknowledge that there are always improvements that could be made to help better support customers in financial hardship. As an institution and as an industry, we should continue to focus on making it easier for customers to deal with us. For a customer, a business in financial hardship is a stressful time and we’re hopeful that the changes currently being implemented will help address issues customers face during these difficult periods.