Evil Anna (A.K.A what’s left of hollowed-out former QLD premier Anna Bligh) is busy white-anting bank reform again, via Banking Day:
One of the keynote speeches at the Thomson Reuters Australian Regulatory Summit in Sydney yesterday was delivered by Anna Bligh, chief executive officer of the Australian Banking Association.
Below is an edited version of some of the main themes she covered.
Bligh’s take on regulation was that there were three factors underpinning a “fundamental re-set” of the industry:
- major regulatory change – notably the Banking Executive Accountability Regime and the start of the Comprehensive Credit Reporting;
- technology – in this context, where technological change intersects with the regulatory sphere; and
- the consumer, causing a transfer of power from institutions to customers.
Among the threats or opportunities that will emerge from the regulatory change, Bligh named three: Open Data and how that might apply in banks and other parts of the economy;
the New Payments Platform; and the entry of new, non-ADI players into the banking sector.Moving away from the theme of three, Bligh said that since the GFC (just on a decade) there had been 57 federal inquiries, reviews or investigations into Australia’s banking system.
“They have resulted in 420 recommendations, many of which have either been implemented or are in the process of being implemented. That’s without any change that might come about due to the royal commission,” Bligh said.
Of these, the change she spent the most time dissecting was the new Banking Executive Accountability Regime, or BEAR. This regime focuses on individual accountability within banking institutions and has potential if done right to powerfully shift culture.
BEAR will start on 1 July for the major banks, with small and medium ADIs given a further 12-month extension to implement and required to be part of the regime from 1 July 2019.
“The equivalent regime in the UK from where BEAR originated, was implemented over a three-year period and the Prudential Regulation Authority in the UK is still consulting on the design of their regime,” Bligh said.
“The initiative goes directly to conduct as well as to culture, both of which are at the heart of the royal commission’s work.
“Comprehensive Credit Reporting is a second example and requires our major banks to fully participate in the new credit reporting system, also by 1 July this year.
“CCR as it’s become known, will have an impact on credit assessments and lending practice, all of which are the subject of royal commission consideration and we could see further proposals out of that process that may or may not impact on how CCR is most effectively rolled out in the interests of customers.
“So the complexity of the task at hand for regulators who are being provided with entirely new and significant powers and the banking sector should not be underestimated,” Bligh said.
It is hard work doing your job, granted. So let’s have a moment’s silence for the bankers that will have to henceforth do…well…banking for the first time in decades. Via UBS, here’s what they’ve been up to in lieu of their job for a while:
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?”
Monetary mobsterism is not banking, I’m afraid.
As for Evil Anna, she has seamlessly migrated from trying to prevent banking reform (and justice) to aiming to derail it. QLD tax-payers are subsiding her pension while she happily runs interference on vital public policy, plus taking the ABA’s…ahem…pay…of $600k.
If there is a Hell for bankers then Evil Anna is going directly to the eighth level where she will burn for all eternity on an endlessly incinerating pile cash.
