NAB chief tells inquiry banks started ‘drifting’ from customers 20 years ago
Andrew Thorburn says he is ashamed of how National Australia Bank has behaved in recent years
https://www.theguardian.com/australia-news/2018/oct/19/nab-chief-tells-inquiry-banks-started-drifting-from-customers-20-years-ago
The National Australia Bank chief executive, Andrew Thorburn, has conceded that problems began seeping into the country’s banking industry two decades ago.
He says that when he entered banking 30 years ago, he was taught that banks existed to serve customers, but the industry started to “drift” in the late 1990s and he was ashamed of how NAB had behaved in recent years.
It means two-thirds of his banking career has been spent in an industry drifting away from customers.
“When I started in banking, it was serving customers, [that] was what was drilled into us [about] why we existed,” Thorburn said on Friday.
“I’ve been in banking 30 years and I think the last 20, we drifted. When you drift you sort of, you don’t know that it’s happening. It looks incrementally sensible. Others are doing it. There’s a system that reinforces it, so shareholders appreciate it if you’re making good and better profits,” he said.
“[NAB’s banking scandals”] happened because we drifted and we lost focus on the most important purpose [for which] the bank exists, which is to serve and enable customers to make very big financial decisions and to trust us in that process.”
Thorburn was appearing before the parliamentary inquiry into the big banks. He was the last of the chief executives of the big four to appear before the inquiry in this round of hearings.
At one stage, he had a heated exchange with the Liberal MP Jason Falinski.
Falinski raised the event of Westpac’s takeover of St George Bank during the global financial crisis in 2008. He pointed out that Thorburn worked for St George from 2002 to 2005.
When Westpac’s chief executive, Brian Hartzer, appeared before this hearing, he had said St George would have collapsed if it wasn’t taken over, which was the first time that information had been revealed publicly.
Falinksi asked Thorburn why it had taken so long for that information to be revealed, which angered Thorburn.
“The inference you are making here, about my reputation … that we should have been held accountable for something, or we made some, had some misconduct, I reject totally, if that’s your inference,” he said. “I think it’s unfair and you should be very clear what you’re saying about us.”
Falinski replied: “Yes, and I’ll be clear, I’m not suggesting that at all.”
Thorburn said: “Right, so you withdraw any question about our reputation.”
Falinksi replied: “Absolutely Mr Thorburn. Absolutely. I made no such inference and if you’ve taken that, I apologise upfront.”
Last week, Commonwealth Bank executives admitted to the inquiry that there had been failures of leadership and greedy behaviour on the part of the bank in recent years, with multiple transgressions stretching back years, some of which had been revealed in the banking royal commission, including dead clients being charged for financial advice.
At stages throughout their testimony, they were jeered by aggrieved CBA customers who were sitting in the public seats of the committee room.
Last month, the corporate regulator announced it had begun proceedings against two entities in NAB’s wealth management division, NULIS Nominees (Australia) Limited and MLC Nominees Pty Ltd, alleging they had charged millions of dollars of fees to a large number of their superannuation members for services not provided.
The announcement came after updated figures showing the financial industry’s fee-for-no-service scandal was continuing to grow, and customers had now been repaid $260m after being charged ongoing fees for services that never materialised.
The regulator said that figure could grow as high as $850m if the total provisions set aside by the big banks for future remediation programs were paid in full.
On Friday, Thorburn said the banking royal commission had caused him to “step back” and look at the way the industry had changed over recent decades.
“When we go back to how did it happen, not focusing on customers, too much focus on financial incentives leveraged, you know, not on customers, and a lot of compliance and regulation and old systems and bureaucracy which kept us, you know, we became too slow and not agile enough, too many layers,” he said.
It is greed that has led Australian banks to steal from dead people