Commonwealth Bank chief executive Matt Comyn has acknowledged the bank has been stuck in a vicious cycle of putting out spot fires and repaying customers because it hadn't properly invested in its systems and processes.
Mr Comyn said the bank had been unable to learn from the lessons of the past because it was focused on the wrong things, which had distracted it from looking after customers.
"There has been culture of us not learning from issues of misconduct in the past ... ultimately that's why I said we got into a period of ongoing remediation without fundamentally understanding the root cause in each of those matters," Mr Comyn told the banking royal commission on Monday.
Mr Comyn has also touched on the AUSTRAC debacle where the bank breached anti-money laundering and terrorism funding laws more than 50,000 times, saying CBA hadn't properly invested in the right compliance framework.
"We were weak in the management of operations and compliance risk," Mr Comyn said of the episode that led to the bank reaching a record $700 million settlement with the regulator. He is the first big four bank CEO to appear before the Hayne royal commission.
'That's my view'
Senior counsel assisting the commission, Rowena Orr QC, read aloud parts of Mr Comyn's witness statement which said the bank was caught in an "escalating cycle of funding remediation, resolution and rectification, rather than prevention and simplification".
When asked if he agreed with the description of an escalating cycle he responded, "Yes, that's my view".
Following the AUSTRAC debacle and the prudential regulator's review of the culture, governance and accountability frameworks at the bank, Mr Comyn wrote to his top 500 executives asking them to reflect on the report and write back to him within a few days.
Marianne Perkovic: "I know I have let some of our clients, people and the community down by not speaking up loud enough to stand up to behaviours that I knew were not right." AAP
In a blunt and to the point piece of correspondence, CBA's executive general manager of home buying Dan Huggins said he thought CBA had become too accepting of poor underlying processes and outdated systems.
Commonwealth Private's Marianne Perkovic would also write saying she was troubled by the knowledge she didn't do more to call out bad behaviour. She also said the bank was too reactive and only moved to fix things when it became a compliance, board level or media issue.
"I know I have let some of our clients, people and the community down by not speaking up loud enough to stand up to behaviours that I knew were not right," Ms Perkovic wrote.
Mr Comyn said he accepted Ms Perkovic's views however "I wouldn't say that Ms Perkovic's comments are reflective".
Ms Orr put the banks on notice saying that since the commission began its work many banks had offered "public apologies or expressions of regret", which were often accompanied by announcements of changes to products or procedures.
"The purpose of this round of hearings is not to hear further apologies or expressions of regret. We do not think that will assist you in fulfilling your task," Ms Orr said during her opening statement.
Ms Orr said the commission did not seek to go over "old ground" and its focus would be on understanding why misconduct has occurred and what can be done to prevent it in the future.This article was first published by https://www.afr.com/
Author: James Frost