Australians do not trust banks with their super, 7 out of 10 want a not-for-profit system, Essential Research polling reveals

AAP MediaNet, media release, 3 March 2017:

Australians do not trust banks with their super, 7 out of 10 want not-for-profit system, new polling reveals

Explosive new polling shows that when it comes to superannuation, most Australians don’t trust the big banks and over two-thirds want the system to run on a not-for-profit basis with all returns to members.

The Essential poll of 1000 people, commissioned by Industry Super Australia, has found that only 31% trust that the banks will ensure the superannuation system works in their best interest. This compares to 38% for the Federal Government; 61% for the Fair Work Commission; and 69% for Industry Super Funds.  

Consumers feel strongly that their interests should be the sole focus - 70% believe all super funds should be not-for-profit with all returns to members rather than split with shareholders; just 6% disagree.

Industry Super Australia chief executive, David Whiteley, says the results send a clear message the public want superannuation to work solely in their interests and not as a profit-making opportunity for the banks’ wealth management machines.

“When it comes to super, the banks are legally required to act in the best interest of their customers; most Australians don't believe they do," said Whiteley.

“Consumers know aggressive cross-selling of advice, insurance and super is designed to boost shareholder profits rather than leave them better off.” 

“The banks’ relentless lobbying to remove consumer default protections could result in people ending up in under-performing funds and a nest egg that’s tens, even hundreds, of thousands of dollars short”.

“Australians have told us what they think – they don’t trust the banks and believe their culture and profit motive are at odds with the purpose of super,” said Whiteley.

It is a sentiment shared by 58% of respondents who believe the banks would use the compulsory nature of super to exploit fund members.

Two thirds of Australians agree that the banks are already too powerful and giving them more of the superannuation market would make the situation worse.

Instead 57% want a small number of high quality super funds run by trusted providers rather than a large menu of bank offerings. 

“Public opinion clearly runs counter to the banks’ efforts to change the super system to suit their vertically integrated business models. Astute policymakers will be listening,” said Whiteley.

The big bank CEOs will appear before a parliamentary inquiry this Friday and early next week. The Standing Committee on Economics’ Review of the Four Major Banks hearings are set for 3, 7, 8 March.

ASIC has recently launched court proceedings against Westpac for a 3-year sales campaign that alleges staff were rewarded bonuses for shifting customers from external super funds into a bank fund. ASIC alleges that Westpac failed its best interests duty to consumers; breached financial licence conditions and Corporations Law and failed to ensure related financial services entities provided services honestly and fairly.

The survey was conducted 15-26 February 2017 and weighted to represent the wider population.

Industry Super Australia provides policy, research and advocacy on behalf of 15 not-for-profit Industry SuperFunds who are the custodians of the retirement savings of five million Australians.

Company tax rate cuts in Australia and the banks that benefit

There has been some finger pointing in mainstream and social media of late over Labor’s use of $7.4 million as the amount banks would be able to retain under the Turnbull Government’s progressive cuts to the company tax rate included in the 2016-17 Budget.

According to the Australian Tax Office on 3 January 2016:

The government announced a reduction in the small business tax rate from 28.5 per cent to 27.5 per cent for the 2016–17 income year. The turnover threshold to qualify for the lower rate will start at $10 million and progressively rise until the 27.5 per cent rate applies to all corporate tax entities subject to the general company tax rate in the 2023–24 income year.

The corporate tax rate will then be cut to 27 per cent for the 2024–25 income year and by one percentage point in each subsequent year until it reaches 25 per cent for the 2026–27 income year.

Full report: Company tax cuts What the evidence shows

ABC News reported in May 2016 that Treasury Secretary John Fraser told Senate Estimates: The cost of these measures to 2026-27 is $48.2 billion in cash terms.

In the first four years it is estimated that these tax cuts will cost the Treasury bottom line an est. $5.3 billion.

So where did the $7.4 billion for banks come from?

Australia is thought to have four big banks – the National Australia Bank (NAB), Commonwealth Bank (CBA), Australia and New Zealand Banking Group (ANZ) and Westpac (WBA) and it appears that this amount is based on projections done with regards to these banks by think tank, The Australia Institute.

The Australia Institute, media release 2016:

Big 4 banks $7.4 billion budget gift

The Coalition Government’s business tax plan would deliver $7.4B to the big 4 banks.

“Cutting company tax rates delivers a massive windfall to an already highly profitable banking sector,” Executive Director Australia Institute, Ben Oquist said.

“It makes no economic or budget sense to deliver the big 4 banks a multi-billion dollar tax break when Australia already has a revenue problem.

“If your agenda is jobs and growth, targeted industry assistance would deliver a much greater return on investment,” Oquist said.

The value of company tax provisions was derived from 2015 full year annual reports for the big four banks. That figure summed to $11,123 million. That figure was projected forward to 2026-27 to give the no change scenario.

The projection assumed bank profit and hence tax payable would increase in line with nominal GDP. The nominal GDP projections used the figures in the 2016-17 budget papers which give nominal increases of:

2.5 per cent in 2015-16,

4.25 per cent in 2016-17, and

5 per cent in 2017-18 and subsequent years.

Company tax cuts do not affect the big banks until 2024-25 when the current 30 per cent rate will fall to 27 per cent for all companies with further reductions of one per cent per annum until they reach 25 per cent in 2026-27.

The results of this are presented in the following table:

Table 1. Benefit of company tax cuts for big four banks, $million

	2024-25	2025-26	2026-27	Total
Savings on company tax	1,756	2,458	3,227	7,441

KPMG stated in Major Banks: Full Year Results 2015 that the Australian major banks reported another record earnings result in 2015 - a combined cash profit after tax of $30 billion.

By year’s end 2016 the major banks were reporting a combined cash profit after tax of $29.6 billion.

The Federal Government’s underlying cash balance for the 2016-17 financial year to 31 December 2016 was a deficit of $33,025 million and the fiscal balance was a deficit of $31,143 million. While net government debt for 2016-17 stood at an est. $326 billion.

In Major Banks: Full Year Results 2016 KPMG observed:

There is an increasing global perception that banks put shareholders’ and executives’ interests ahead of their customers and the community. This perception is more real for banks than for other corporates as they are seen to rely not only on compliance with strict regulation, but increasingly on the goodwill of the community and government to continue to operate in their current form.

We are seeing heightened scrutiny of Australian banks, including through the recent Standing Committee on Economics (the Committee) inquiry, becoming a regular feature of media and political commentary, notwithstanding eight separate inquiries since 2009. There are many reasons for this increased level of oversight, with terms such as “trust deficit” and “trust gap” often cited as the root cause.

It has been argued that the financial services industry has lost touch with the core proposition customers are seeking by forgetting its real purpose in society and becoming too inwardly focussed. These themes were repeated in testimony to the Committee.

Readers can make their own minds up as to whether banks have lived up to the historic social licence granted them by community (see bank scandals since 2009 and alleged superannuation owing in 2017) and, if they actually need any further tax relief or if that $7.4 billion would be much better in the hands of the Commonwealth Treasury.

Make no mistake - Trump is placing all national economies in jeopardy once more

In the midst of The Great Depression (a decade long severe global economic downturn triggered by the 1929 Wall Street stock market crash) the U.S. Government enacted the 1933 Glass-Steagall Act which tightened banking and financial sector regulations.

At the urging of the same financial and banking sector in 1999 a bipartisan agreement saw the introduction of the Financial Services Modernization Act which repealed large parts of the Glass-Stegall Act and the Bank Holding Company Act.

In the wake of another crisis generated by the American sub-prime mortgage melt-down, aptly titled The Global Financial Crisis, the U.S. Government in July 2010 enacted the Dodd–Frank Wall Street Reform and Consumer Protection Act to reimpose stricter regulations.

Now we hear that Donald Trump is moving to roll back the Dodd-Frank reforms. In particular the Volker Rule against banks using depositor funds for speculative bets on their own account and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund - practices thought to have exacerbated The Global Financial Crisis.

The Sydney Morning Herald, 4 February 2017:

US President Donald Trump moved to chisel away at the Obama administration's legacy on financial reform, announcing a series of steps to revisit the rules enacted after the 2008 financial crisis and setting the stage for a showdown with Democrats over the future of Wall Street regulation.

After a White House meeting with the executives, Mr Trump signed a directive calling for his administration to identify potential changes to provisions of the Dodd-Frank Act, crafted by the Obama administration and passed by Congress in response to the 2008 meltdown….

Trump states we expect to be cutting a lot from Dodd-Frank because I have so many people, friends of mine, that have nice businesses, and they can't borrow money. They can't get money from the banks — they just can't get any money because the banks won't let them borrow because of rules and regulations in Dodd-Frank despite evidence that the banking sector is making a considerable number of commercial and industrial loans.

Most Australian families have memories of The Great Depression which hit this country hard and all will be able to recall the ripple effects from The Global Financial Crisis, so it is not unreasonable to fear that what this erratic and ignorant American president does in relation to U.S. banking and financial sector legislation has the potential to send the world spinning into yet another American-generated global economic crisis.

Forewarned is forearmed and this time around everyone would be wise to closely follow reputable newspapers and economic commentators to see which way the wind blows as the United States once more enters dangerous waters.

Review of the Four Major Banks (First Report) published 24 November 2016

House of Representatives Standing Committee Review of the Four Major Banks (First Report), November 2016, opening lines of Chair’s forward:

Banking regulation should have two key goals: promoting financial stability and achieving strong outcomes for consumers. Financial stability is critical – but so is ensuring that consumers get a fair deal from the banking sector.

Due to Australia’s strong regulatory framework and the banking sector’s prudent management of financial risk, no Australian bank regulated by the Australian Prudential Regulation Authority (APRA) has ever failed. We need only consider the economic impact of bank failures in other nations to understand the importance of a stable banking system.

However, while they have remained financially strong, Australia’s major banks have let Australians down too frequently in too many other ways.

Australians turn to banks for assistance when making some of the most important decisions and facing some of the most serious challenges of their lives: borrowing to buy their first home; investing to support their retirement; and, in some cases, accessing insurance policies that they had hoped they would never need.

Australians should be able to trust that their bank will act in their best interests when they turn to them for help. It is clear that in some cases this has not happened….

Financial Review, graphic, 24 November 2016:

Are We Any Closer To Having A Banking Royal Commission?

In Do we need a Royal Commission into the banks?  (North Coast Voices 21^st April 2016) I wrote: “What is very obvious is that there is a need to shine a very strong light on the banking/ finance industry in order to force the changes that are required to make it fairer and more responsive to customer needs.  Moreover there is an ongoing need to ensure proper compensation for consumers who have been hurt by unscrupulous behaviour over recent years.  And the “bad apples” in the sector need to be identified and removed.  This would lead to a marked improvement in public confidence in the banking/finance system.”

What has changed in the six months since then?

Very  little of substance.  The returned Coalition Government continues to reject holding a Royal Commission into the banking/finance system while the ALP Opposition and the Greens continue to call for one.  However, the Government has obviously been feeling under pressure on this matter. Although it still continues to rail contemptuously about the Opposition’s “populist” Royal Commission policy, it has abandoned its “do nothing” stance to take some limited action which it obviously hopes will neutralise Labor’s calls.

The first of these was a brief inquiry conducted by the ten member House of Representatives Standing Committee on Economics on October 4^th -6^th.  (The composition of this Committee is: five Liberal MPs, one National, three Labor and one Green.) It was called by Prime Minister Turnbull after the major banks failed to pass on in full the Reserve Bank’s 0.25% rate cut to mortgage holders. Mr Turnbull said that it was an opportunity for the banks to explain how they deal with their customers, and why they make interest rate decisions and be open and accountable about it. It is significant that it was interest rates, not the many other really appalling actions of the banks over many years that produced this tepid inquiry.

The CEOs of the four major banks (Commonwealth, ANZ, National and Westpac) each spent three hours answering questions on matters such as bank policies, past mistakes, how these had been remedied and the action taken on those responsible for mistakes and illegal activities. 

Some committee members were concerned about the very limited time available (around 20 minutes with each CEO for each member) which led to the question of whether CEOs would be willing to return for a further session. Deputy Chair of the Committee Matt Thistlethwaite (Labor) remarked that the twenty minutes he would be getting was farcical because he had two days’ worth of questions to put to the CEOs.  Apparently those asked about returning expressed a willingness to do so – quite understandably given that this “inquiry” was obviously very preferable to a Royal Commission.

All CEOs were contrite about their banks’ past performances but claimed that the problems had been investigated (or were still being reviewed) and were (or would be) fixed. Obviously they believe that the Australian community should accept promises that the banks will put their own houses in order – something they have obviously not felt compelled to do in the past. The fact that many (if not most) of those responsible for the bad behaviour are still employed by the banks raises serious questions about bank culture and doubts about the banks’ commitment to improvement.  There are many other issues which need more than vague promises about “doing better in future”.  These include the lack of transparency, the lack of competition in the sector, the incentives which have encouraged predatory and illegal behaviour, and the inflated salaries rewarding the CEOs who are ultimately responsible for the culture and the bad behaviour.

The inadequacy of this brief and tepid inquiry was obvious even to the Government.  Although still anxious to shield the banks from a really sweeping and effective inquiry, it has recently announced a further inquiry – a banking tribunal which it is claimed will be a low-cost way for victims of the banks to seek justice.

The Opposition has predictably seen it as yet another way to avoid a Royal Commission with Shadow Financial Services Minister Katy Gallagher claiming it was “all pre-determined and pre-agreed with the banks.” 

What must be worrying the Government is that there is considerable public support for a Royal Commission and the paltry measures so far undertaken by the Government are unlikely to weaken this support. A national poll conducted by the Australia Institute in the second half of September found 68% supported a Royal Commission or similar inquiry and only 16% opposed it.  Furthermore 52% of those surveyed believed that Prime Minister Turnbull was protecting the banks in refusing to call a Royal Commission. Only 21% disagreed.

This issue is not going to go away. The more the Government tries to defuse the situation with ad hoc measures such as the recent ineffective Parliamentary Committee inquiry and the promise of a banking tribunal, the more it is going to be seen as being out of touch with a very substantial part of the electorate.

Hildegard

Northern Rivers

GuestSpeak is a feature of North Coast Voices allowing Northern Rivers residents to make satirical or serious comment on issues that concern them. Posts of 250-300 words or less can be submitted to ncvguestspeak AT gmail.com.au for consideration. Longer posts will be considered on topical subjects.

House of Representatives Standing Committee on Economics' Review of Australia's Four Major Banks - Days 1 & 2

On 15 September 2016 the Australian Treasurer asked the House of Representatives Standing Committee on Economics to inquire into and report on a Review of Australia's Four Major Banks.

Public hearing were conducted on 4 to 6 October.

News.com.au reporting on the Commonwealth Bank appearance on 4 October 2016:

Commonwealth Bank chief Ian Narev to face parliamentary inquiry into banking system…..

On Tuesday Mr Narev admitted an independent review found one in 10 customers received “inappropriate financial advice” from the bank.

Speaking to MPs, he said an independent report last week found of 8000 customers who asked for their financial advice to be reviewed, 6000 had been completed.

It found more than 10 per cent of those were given inappropriate advice. The bank had paid out $11 million in claims since its initial payout of $52 million several years ago.

Mr Narev defended the time it had taken to resolve the matter and said it would be wrapped up by the end of the year.

“We’ve gone back a large number of years in this program to statements of advice that go back prior to the global financial crisis,” he said. “So yes it has taken a period of time to do that but we’ve done it thoroughly, with independent oversight.”…

When asked by Labor’s Pat Conroy about whether there had been disciplinary consequences for CommInsure officers who rejected insurance claims from terminally ill people or refused to pay out life insurance, Mr Narev said there had been no terminations of employment.

“There are certainly individuals where we know enough about them that they’ve had some consequences related to remuneration but at this stage we have not had individuals terminated because of this because we’ve not seen the need to do that,” he said.

Independent committees within the bank will decide on disciplinary action after the review is completed.

Mr Narev said he expected there would be more cases of poor customer outcomes, but said this would be followed by more announcements regarding compensation due to customers…..

This was The Canberra Times commenting that same day:

Power is a funny thing.

It shifts and flows, is both tangible and vague.

Often, it is most identifiable when it is missing. 

As Ian Narev, the Commonwealth Bank CEO who received $12.3 million in pay last financial year, fronted the first of what are to be annual parliamentary committee hearings, who held the power was clear.

And it wasn't the government.

As far as Narev was concerned, everything he needed to say was said at his opening statement - the bank had not always done right by customers, but it was learning and changing and on the whole, its customers were "the most satisfied they've been".  

It was all, he said, about being strong and fair.  Strong banks equalled a strong economy. And that was almost an excuse for anything, even if they needed to work on being a little more fair.

Throughout the three-hour hearing, he often referred to what he said at the beginning, to the point where it became a mantra, no matter how many cases were mentioned.

On 5 October it was The Sydney Morning Herald which noticed what is probably a Brian Loughnane-inspired evidential trend:

This time, it was Shayne Elliott, the ANZ chief executive officer, who was very sorry.

He was very sorry for the issues within its wealth management division and its rural lending business, which saw ANZ foreclose on drought-stricken farmers.  

He was very sorry for not supplying all the promised services to thousands of financial planning customers, resulting in $30 million compensation. 

Very sorry for overcharging fees.

Very sorry for errors of a "reasonable magnitude" which saw more than 1.3 million customers within the OnePath financial advisory and life insurance arm suffer, including 1400 who had their superannuation directed to the wrong account.

These apologies are the opening moves.

But they were "mistakes", and the bank has since "put it right".

Processes have changed, systems have been put in place.  There's no reason to push further, Mr Elliott implied.  He's "proud of the culture of the bank", because when it's made aware of problems, it fixes them.

There's nothing more to see here.

Herald Sun, 5 October 2016:

Regarding the treatment of customers, Mr Elliott said ANZ had “not always met the standards we set for ourselves or that the community rightly expects of us”. He revealed the bank had seen off 40 financial planners in the past year after the bank breached regulatory rules.

Mr Elliott also admitted the bank had “poorly managed” an incident when 1400 customers had superannuation directed into the wrong account.

The Sydney Morning Herald, 6 October 2016:

So how remiss had the banks previously been in dealing with their indiscretions?

Let's take ANZ. Last year it reported 45 breaches by its financial planners to the regulator. That is one in 20 and in one year. But the year before there were only six reported.

As Pat Conroy noted,  that was a 750 per cent increase in reported breaches in the space of a year so either there was a massive jump in adviser breaches or they had not been reported in the past.

Elliott had to admit the latter was more likely.

Thus far the big banks have been all but laughing openly at parliament and the general public.  

Commencing at 9.15am this morning it's NAB and Westpac's turn to pretend to care tuppence.

Hearing transcripts can be found here.

Opposition Leader Bill Shorten and those 111 bankers, planners and advisers

Opposition Leader and MP for Maribyrnong Bill Shorten in Hansard on 31 August 2016:

No less than eight members of this cowardly government have previously called for a royal commission, and I am confident that there are many more who now support this move.

What is the case for the royal commission? We just cannot leave it to ASIC, despite what the government said. We need a royal commission. Let me go through the scandal. Whilst one does not presume to be a predictor of the future, let me describe the last few scandals and let's have a guess if it will happen again. The journalists and whistleblowers expose the scandal and there is a public outcry that follows. Maybe even some of the brave hearts opposite are outraged, with their crocodile tears. But then it is characterised as an isolated incident—mid-tier rogue sort of gunmen going off on their own—and not the conduct of the whole bank. There are heartfelt promises that it will never happen again. Perhaps there might even be a special inquiry by ASIC, APRA or a government appointed panel. And do you know what happens a few months later, Mr Speaker? We do it all again because the banks do not respect the government. They are not worried by the government's calls for action because they know that with this mob in power nothing will ever happen.

What we need is real action. Australians are sick and tired of the scandals being investigated after the harm and the damage is done. They are sick of the phoney apologies and they are sick of the speeding fines that this government issues to the banks. We need public scrutiny. The systemic problems of a royal commission require public scrutiny. Since 2009 at least 111 bankers, planners and advisers have been quietly sacked from their companies or reported to ASIC for misconduct. That is more than one a month. Australians do not know what led to these sackings or what any internal investigations uncovered afterwards.

Commonwealth Bank may be investigated for victimisation of whisleblower offence

The Australian bad bank reports flow like an never-ending stream …..

The Sydney Morning Herald, 7 May 2016:

The chair of the powerful Senate economics references committee has lashed the Commonwealth Bank its "unacceptable" lack of attendance at a Senate inquiry into wrongdoing within its insurance arm CommInsure and has accused the bank of bullying. 

The rebuke comes as lawyers for CommInsure's former chief medical officer turned whistleblower Dr Benjamin Koh revealed they had lodged a formal request with the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission to "explore prosecution of certain employees of the bank for their victimisation of Dr Koh".

Under section 156C of the Life Insurance Act, 1995, victimisation of a whistleblower can carry a prison sentence of up to six months. 

Australian Federal Election 2016: corporations behaving badly

Since the Turnbull Government announced it was returning some of the Abbott funding cuts to Australia's corporate watchdogs (by way of an increase in an existing levy on banks and other financial institutions) the mainstream media has started to move on from commenting on what appears to be endemic corruption in corporate Australia.

The exception to that observation is The Guardian who reported on The Australia Institute report and also compiled a banking scandal list.

The Australia Institute, 2 May 2016:

A new report analysing findings from across several corporate regulatory bodies and related agencies finds widespread wrong-doing in the Australian private sector. 

Meanwhile the six major regulatory bodies and other agencies have seen 3,926 staff cut (or 14.9%) between the 2013-14 and 2015-16 budgets – meaning there are less cops on the corporate beat.

The research, commissioned by the ACTU, reviews figures from the Australian Competition and Consumer Commission (ACCC), Australian Securities and Investments Commission (ASIC), Australian Tax Office (ATO), Fair Work Ombudsman, Fair Work Commission and Australian Bureau of Statistics (ABS).

Excerpts from Corporate Malfeasance in Australia:

* The Australian Tax Office (ATO) annual reports were examined to determine the extent of tax evasion and avoidance. Overall the ATO figures and discussion suggest that in the ATO's normal course of business it recovers huge amounts from companies and other businesses that attempt to conceal their liability for taxation. In earlier years the ATO was prosecuting over 500 companies a year and still prosecutes 300 a year, the downward trend possibly reflecting the staffing reductions. It settles with many more and as a result recovers some $3.5 billion in tax from companies attempting to hide their profits. Companies also try to underpay the GST and other indirect taxes as well as PAYG on behalf of their employees; those amounted to $6.3 billion in the latest year for which there is complete data. One of their compliance programs, the taxable payments reporting system' specifically targets building and construction firms and has recovered $2.3 billion for the year 2012-13 alone. Similar successes have been recorded in relation to the other specific target groups such as the international profit shifting program.

* On Tuesday the 5th of April 2016 The Australian Financial Review published nine stories on wrong-doing or alleged wrong-doing on the part of the Australian corporate sector:

1. Banks considering legal action against the board of Arrium (a listed company) for drawing down a loan while simultaneously seeking to negotiate offloading debt at a large discount (page 1 and 11),

2. Panama leaks suggest BHP's many British Virgin Island companies established to create profits appear on the British side of the company (p. 1),

3. WIN alleged Nine Entertainment broke its supply agreement with a streaming service (p. 2),

4. Ken Henry (NAB chair) supported calls for Australian companies to take more responsibility for misdeeds and ASIC wanting to make boards criminally responsible for bad conduct (p. 6),

5. BHP threatening to fire a law firm in Panama for wanting to undertake due diligence on BHP's operations.

6. Queensland Nickel likely to go into liquidation without making provision for workers' entitlements (p. 8),

7. ASIC to 'nail' a second among the big four banks following court proceedings against ANZ (p. 12),

8. Rate rigging probe to investigate other big four banks (p. 15), and

9. CBA facing senate inquiry into charges, inter alia, that it overlooked three whistle-blower claims, ANZ had been examined over links with corruption scandal in Malaysia (p. 15).

A casual check of the front page the previous day suggested this is not unusual, with the lead story of the ATO targeting 800 wealthy individuals using corporations and other structures in tax havens and involving 'suspected money laundering, arms and drug deals, and tax avoidance'. This of course referred to the suspect activities organised by the law firm Mossack Fonseca and largely operating out of Panama.1 Another page one story refers to the takeover of Asciano, which was supposed to involve three independent entities but suggests that common ownership will thwart that independence against the deal negotiated with the ACCC.

*The April 5 articles involved five of the top 10 listed companies in alleged wrong-doing in just one day of news, suggesting such malfeasance is rife among Australia's leading companies. That impression gave rise to this paper which attempts to provide some estimate of the magnitude of the problem. To that end the paper examines various data sources that give a more complete picture of corporate behaviour in Australia. In generating a database of misbehaviour it has to be appreciated that regulators are inclined to settle with corporate wrong-doers. The compliance pyramid used by many regulatory agencies is specifically designed to begin with activates such as education and negotiation and ending with legal proceedings. Usually the number of cases diminishes rapidly as the government agency moves up the compliance pyramid.

In generating a database of misbehaviour it has to be appreciated that regulators are inclined to settle with corporate wrong-doers. The compliance pyramid used by many regulatory agencies is specifically designed to begin with activates such as education and negotiation and ending with legal proceedings. Usually the number of cases diminishes rapidly as the government agency moves up the compliance pyramid.

* The Australia Institute has examined ACCC media releases over the last ten years (from 2006). A total of 92 matters covered by media releases were published relating to ACCC action against companies included in the top 50 listed corporations. On 29 occasions the ACCC took legal action and gained either a ruling in its favour or an out of court settlement. On the other 63 issues, the ACCC did not proceed with litigation, but made administrative proceedings, recommendations or expressed concern.

Of the 92 issues the ACCC took some action on, three companies were involved in 56 of them – the Woolworths, Wesfarmers (parent company of Coles) and telecommunications giant, Telstra.

* ASIC has the power to commence prosecutions, usually through the Director of Public Prosecutions. In the four and a half years to December 2015 it successfully concluded 3,115 cases against corporations. ASIC reports on enforcement activities every six months.19 These include only cases that have been successfully concluded. The areas of enforcement include market misconduct, corporate governance misconduct and financial services misconduct for both large and small businesses. The types of enforcement include criminal and civil proceedings, administrative remedies and enforceable undertakings and negotiated outcomes.

The Guardian, Timeline: banking scandals in Australia since 2009 (in reverse order), 29 April 2016:

Wednesday 6 April 2016

Former ANZ planner jailed for stealing almost $1m  - jailed for more than six years….for stealing almost $1m from an elderly client to feed a gambling debt. ANZ promised to reimburse the victim…..

Tuesday 5 April 2016

Westpac subsidiary paid penalties of $493,000 after breaching consumer protections - Asic found it breached important consumer protection provisions relating to the repossession of motor vehicles, including failing to provide customers with default notices prior to commencing enforcement proceedings to repossess mortgaged vehicles; and failing to provide customers with legally required information setting out their rights within the required time frame after it repossessed mortgaged vehicles.

Tuesday 5 April 2016

Asic sued Westpac over alleged market manipulation in setting bank bill swap rate - Asic started legal proceedings in the federal court in Melbourne against Westpac for unconscionable conduct and market manipulation in relation to Westpac's involvement in setting the bank bill swap reference rate in the period 6 April 2010 and 6 June 2012. It is alleged that Westpac traded in a manner intended to create an artificial price for bank bills on 16 occasions during the period of 6 April 2010 and 6 June 2012….

Monday 4 April 2016

ANZ announces it reported three breaches of dispute resolution requirements - ANZ told a parliamentary inquiry that for 2014-15, it had reported three breaches of the internal dispute resolution requirements under the code of banking practice to the code compliance monitoring committee and six in 2013-14. Two breaches for 2014-15 were self-identified and one was raised with ANZ by the committee.

Wednesday 30 March 2016

ANZ announced it would refund $5m - …..to 25,000 customers after it failed to properly apply some fee reductions and fee waivers for certain customers….

Thursday 17 March 2016

Asic imposed conditions on Macquarie financial services license - Asic imposed additional conditions on Macquarie Bank Limited's Australian Financial Services (AFS) licence for breaches relating to the handling of client money between March 2004 and 2014. The breaches raised issues including failing to deposit monies into a designated client trust account; and making withdrawals that were not permitted from such an account….

Tuesday 15 March2016

ANZ gives $4.5m compensation for breaches - ANZ confirmed engagement of PricewaterhouseCoopers in January 2016 to conduct an independent compliance review within its OnePath subsidiaries, following compliance breaches that were proactively reported to Asic from early 2013. Since February 2013, ANZ has compensated about $4.5m to around 1.3 million OnePath customers for breaches including not following up on some unbanked cheques and for superannuation contributions not being allocated to the customer's correct account.

Read the rest of the seven year timeline here.

The Australian, December 2015:

NAB boss Andrew Thorburn earned $5.5 million for his first full year in the banking giant's top job.

Mr Thorburn's remuneration package for the year to September 30 was largely made up of $2.3m in cash and more than $3m in cash and share-based bonuses.

During 2013-14 he earned $2.2m as the head of NAB's Bank of New Zealand subsidiary before taking on NAB's top job on August 1 last year.

His pay packet was dwarfed by his contemporaries at ANZ and the Commonwealth Bank.

ANZ boss Mike Smith received total remuneration worth $10.8m, including a $3.3m cash salary, while Commonwealth Bank chief executive Ian Narev's pay fell to just under $8m.

Gail Kelly collected nearly $12m before she left the chief executive's chair at Westpac in February.

According to the Parliamentary Joint Committee on Corporations and Financial Services:

On 4 June 2015 the House of Representatives referred an inquiry into the impairment of customer loans to the committee for inquiry and report by 31 March 2016.

On 4 June 2015 the committee resolved that:

* in conducting the inquiry the committee will not investigate or seek to resolve disputes between customers and banks; and

* where the experiences of customers may inform the committee about the practices of banks, the committee welcomes submissions that explicitly address the terms of reference.

On 22 July 2015 the committee extended the closing date for submissions to 21 August 2015.

On 2 March 2016, the House of Representatives granted the committee an extension of time to report until 20 May 2016.

On 15 April 2016, the inquiry lapsed due to the prorogation of the House of Representatives.

On 19 April 2016, the committee resolved to re-adopt the inquiry using the same terms of reference as the original inquiry referred by the House of Representatives on 4 June 2015 but with a reporting date to be determined by the committee.

This still sitting inquiry has held 8 public hearings to date and received 195 submissions.

Here are excerpts from one submission concerning a home build in a suburb with a median house price of over $1.5 million:

* BankWest insisted that the mortgage was only available to us as a Commercial Loan Facility due to the size of the build. We were told this was appropriate even for a private residence.

 * BankWest was so inefficient with their drawdown to pay the builder and quantity surveying checks, that months of building time were lost. It could take up to 4 weeks to get an approved drawdown. Building stopped during this period......

* At this point no loans were in arrears

* BankWest stopped all contact.

* BankWest increased interest rates to a default 18.5%.....

* ......were offered $11.5m by a third party for the house so long as it was completed.

* BankWest refused the offer.

* BankWest refused to complete the house

* BankWest charges kept accruing.

* BankWest denied all contact with us for nearly 12 months whilst charges kept accruing.

* BankWest appointed receivers.

* Receivers charged huge fees

* BankWest devalued the property extremely low

* .....were denied any right to see valuation.

* ..... were denied any right to see monies being spent.

* .....were denied any right to see any administration costs.

* BankWest then completed the build of the property.as per our request 12 months earlier.

* The completion cost of the build was blown out with huge administration charges and interest.

* BankWest then sold a potential $10m property undervalued with only a 3 week sales campaign.

* Coincidently the only bidder at the auction was a senior executive from NAB whose opening bid was the approximate amount of the mortgage.

* The receiver’s then set a seller opening bid of $7,225,000 and instructed the auctioneer to announce that anyone who paid $1.00 more for this property would purchase the property today.

* BankWest Lawyers were threatening and acted unconscionably. I have to state in my life I have never felt so threatened and shaken by a conversation.

* BankWest demanded we pay an an extra $500K in extra charges.

* At this point I contacted the Banking Ombudsman.

* Within 48 hours of the Ombudsman contacting BankWest they immediately dropped the extra $500,000 of extra charges. Why?

* BankWest demanded that I signed a confidentiality agreement about this process.

* BankWest demanded that I signed an agreement agreeing never to take legal action against them.

* No documents relating to the sale or process were ever provided. [my red bolding]