You've got more than just a few bad apples and you've got to think about the tree itself says Medcraft.???

CommInsure scandal: ASIC chairman Greg Medcraft says investigation ramping up

Peter Ryan

21 March 2016

http://www.abc.net.au/news/2016-03-21/comminsure-scandal-asic-ramps-up-investigation/7262810

The corporate regulator says its investigation into the scandal at CommInsure is now a top priority and extra resources have been allocated to dig deeper into the corporate culture at the Commonwealth Bank's insurance arm.

Australian Securities and Investments Commission (ASIC) chairman Greg Medcraft has confirmed the probe has been ramped up, while warning companies they can no longer blame poor corporate behaviour on "a few bad apples".

"It is a high priority and we will be reallocating resources away from other surveillance projects in order to do this," Mr Medcraft told AM.

"What we're trying at the present time is to look at the actual scope of that investigation and also the timing of it in terms of how far we go back, and that'll form the basis upon which we move forward on the investigation."

Poor culture at 'a lot of the banks'

Mr Medcraft's comments follow an investigation by the ABC's Four Corners and Fairfax Media which uncovered several cases of alleged unethical behaviour at CommInsure that could signal systemic problems in the insurance industry.

The investigation revealed several cases where claims for payouts were rejected by CommInsure executives despite evidence that the claims were legitimate.

Mr Medcraft said there was also evidence that the scandal at CommInsure could be related to broader cultural issues across the financial services industry.

"What I have said before is that, clearly, there is an issue of culture in some parts of, well a lot of, the banks," Mr Medcraft said.

"What has to happen is that people have got to not just talk about culture - actions have got to start speaking louder than words on culture and they've got to start thinking about putting their customer first.

"I think what has happened to CommInsure should be a signal to the industry more broadly."

Mr Medcraft said the case of Comminsure was evidence that the common excuse that "a few bad apples" were behind bad corporate behaviour was no longer valid.

"There's got to be a point at which you've got more than just a few bad apples and you've got to think about the tree itself - I think we've had a number of instances in the last couple of years," he said.

Companies need better whistleblower protection: Medcraft

Mr Medcraft also said it was not good enough for company boards to promote strong ethics and that the message needed to go further down the line to middle management and general staff.

"Making sure that it does start at the top, actually making sure that the mindset that's being set rolls through the organisation - and that means making sure that you've got good communication, constant challenge, making sure you've got good whistleblower arrangements internally to make sure that if people are seeing the wrong thing happening they can do something about it," he added.

Mr Medcraft did not comment directly on the sacking of CommInsure's chief medical officer, Dr Benjamin Koh, who made his concerns known to the CommInsure board.

However, he said whistleblowers needed greater protection.

"Companies need to have whistleblower policies that their employees can have trust and confidence in - that actually they can have confidence that they can blow the whistle on issues that they've seen and without fear of retribution," he argued.

Mr Medcraft is outlining his concerns about corporate culture at ASIC's annual forum which begins in Sydney today.