CBA chief Ian Narev (left), chairman David Turner and CFO David Craig. Photo: Rob Homer
Commonwealth Bank chairman David Turner has conceded the bank was far too slow in responding to serious misconduct in its financial planning arm, describing the behaviour of rogue planners as ”shocking”.
Facing questions over the bank’s failure to act on serious transgressions by planners that came to light in 2008, Mr Turner made his strongest comments yet on the scandal.
”What we did was shocking,” he said at the bank’s annual meeting on Friday.
”There’s no excuse for giving bad advice, absolutely no excuse. We had the wrong people giving the advice and the business was structured wrongly, and remunerated wrongly, and the culture was wrong.”
A BusinessDay investigation earlier this year exposed details of the scandal in CommBank’s planning arm, including the alleged forging of signatures, the creation of unauthorised investment accounts and overcharging of fees.
Whistleblowers from the bank first contacted the Australian Securities and Investments Commission in 2008. One of the planners, Don Nguyen, was suspended for a month in the same year, but he was later promoted. In March 2011 Mr Nguyen was banned from working as a financial planner for seven years.
Mr Turner said the bank had been ”slow” in acting on the information about the rogue planners, but said the board moved quickly once it knew of the scandal. ”It was too slow in coming up through the organisation,” he said.
”When we did find out about it and started to move with ASIC to investigate and take the action necessary to put it all right, we moved extremely fast,” he said.
”In so far as the board is concerned we did all we possibly could, but I’m absolutely not denying that we got it wrong in the first place.”
The bank has previously said it ”deeply regrets” the poor advice that was provided by the staff and admitted there was a ”sale-based” culture among some of its staff. Mr Turner said in the past three years this part of the bank had overhauled its pay structure, training and culture.
Mr Turner’s comments came as the bank’s board and management faced questions over legal complaints following its BankWest takeover of 2008, its environmental policies, and its preparedness for a housing meltdown.
But after a week in which the bank posted a 14 per cent lift in quarterly profit to $ 2.1 billion and its share price hit a new record high of $ 79.88, the protest vote was marginal. All resolutions passed easily.
It emerged this week that the bank will face a class action over allegations it unfairly terminated commercial loans after buying BankWest in 2008.
Critics say the bank had an incentive to see some of its customers default, but chief executive Ian Narev said it was ”categorically wrong” to claim the bank put people into hardship for financial gain.
Mr Turner rejected a call for the bank to eliminate its exposure to the coal industry, and said the bank conducted tests to ensure it could handle an ”Armageddon situation” in the economy.