Via Banking Day:
Earlier this week, retail banks in Australia were told that they will soon be required to sign up to the new Australian Banking Association’s new Banking Code of Practice as a condition of membership.
The ABA’s new Code is currently awaiting ASIC approval, the association said. It made no reference to critiques of this policy in the Royal Commission into banking misconduct, nor to previous court cases where borrowers were able to use provisions in the existing code to argue shortcomings in contracts, much to the dismay of banks, who had not wanted to see their code used against them.
CEO of the Australian Banking Association, Anna Bligh, said the new code, now to become a requirement of ABA membership, was a significant ramp up of the industry’s efforts to improve conduct and culture.
“This new code will be binding, forming part of relevant customer contracts, enforceable by law and will be monitored by an independent body,” she said.
“While there is much work still to be done, Australia’s banks are serious about genuine reform which addresses conduct and culture, with the Banking Code of Practice a cornerstone of these efforts.”
Come now, Evil Anna, this is ridiculous. Your scam is busted. The bank’s fake reform effort has failed. The bank’s fake government has failed.
There’s a pretty simple reason for both. Australian banking itself has failed so comprehensively that any Code of Conduct (let alone the above) is like applying a band aid to a massive infarction. Via UBS:
Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
Round one of public hearings in the Royal Commission began on Tuesday 13th March with an initial focus on consumer lending. So far the Royal Commission has been presented with substantial evidence based on a number of case studies into banking misconduct. The following are a series of quotes from the Royal Commission transcript which illustrate the extent of these issues:
Fraud and Bribery
Counsel Assisting, Ms Rowena Orr, QC: “I want to put to you is that NAB knows, & you know, that there were unsuitable loans, there was false documentation, there was dishonest application of customers’ signatures on consent forms & there was the misstatement of some loans in loan documentation.
The whistleblower is recorded as saying: ‘One customer recently said at a particular branch, they told him he could borrow $800,000, but the valuation was only $450,000. The whistleblower said the money exchanges hands in cash, in envelopes, white envelopes usually over the counter. Money is deposited at CBA, so NAB can’t detect the deposits’. Now, this is the information provided by the second whistleblower. Is that right?”
Mr Waldron, NAB – “That’s correct”
Counsel Assisting, Ms Rowena Orr, QC – “And the whistleblower tells NAB that these people are making up fake payslips, fake ID, fake Medicare cards … They charge $2,800 bribery for each customer for home loans”.
Failure to verify customer income
Counsel Assisting, Ms Rowena Orr, QC – “And it wasn’t just the fact for Mr Meehan, that had submitted more than 50% to a single lender; it was also the fact that the particular lender that he had submitted them to was Westpac because Aussie [Home Loans] had formed the view that the credit assessment processes at Westpac were more lax than at other lenders; is that right? Aussie had formed the view that the fact that they [Westpac] were just requiring a letter of employment, as opposed to payslips, would be something that brokers would become aware of to be easier to provide the documentation that was necessary. And do you mean, by that, a letter of employment is an easier document to falsify?”
Lynda Harris, Aussie Home Loans – “Yes”.
Failure to assess customer expenses
Counsel Assisting, Ms Rowena Orr, QC – “The first issue I think that’s worth mentioning this across home loans…it’s a lack of questions & verifications about expenditure. When we ask for copies of their assessment, is that it looks much more likely that a benchmark has been used than they looked at the consumer’s actually expenditure, which can vary considerably from a benchmark figure. There is also very little evidence that expenditure has actually been verified in any way.”
Mr Ranken, ANZ – “ANZ recognised there were instances where it lacked evidence to show that genuine inquiries had been made”
Failure of internal controls
Counsel Assisting, Mr Dinelli – “The remediation paid demonstrates that processing errors occur across a variety of credit products. They occur predominantly by reason of the application of automated processes, but human errors left unchecked often underlie them.”
Mr Van Horen, CBA – “It was the error we made in our serviceability calculation and the mapping the data flows … without overstating it, doomed to fail … having robust change processes, I think, was our failing and it’s clearly an area of ongoing work.”
Failure to report misconduct to ASIC
Counsel Assisting, Ms Rowena Orr, QC – “NAB knew enough to sack five employees for dishonesty and for conflict of interest, is that right? It knew enough by November to sack people for those reasons. Are you telling me it didn’t know enough to tell ASIC that there was a problem?”
There is simply nothing left for banks to fail at.
If there is a Hell for bankers, Evil Anna is going there.
