Westpac chief executive Brian Hartzer has braced staff for "uncomfortable" revelations of the banking giant mistreating customers, on the eve of the first round of hearings at the banking royal commission.
Tuesday marks the start of hearings that will scrutinise how Australia's biggest financial institutions have treated consumers when selling products including home loans, car loans, credit cards and credit insurance.
In a frank email to staff, Mr Hartzer said there were cases where the bank had not treated customers with "respect," and the lender still needed to make further improvements in its internal systems and processes.
At the time of publication, no witness list had been published by the commission led by former High Court judge Kenneth Hayne, and Mr Hartzer said the bank could not predict where the royal commission might go.
"The one certainty, however, is that you will hear about instances where we haven’t got it right for our customers," Mr Hartzer wrote.
"Some of these examples will be uncomfortable to hear and will no doubt disappoint you, as they have me."
"They show that over the last decade there have been too many cases where we have not treated customers with the respect they deserve.
"They also show that we have more work to do to make our systems and processes more reliable, to make sure we’re getting it right for our customers every time, and importantly that we learn from the things that go wrong," the email said.
Westpac is due to face scrutiny in this round of hearings, to take place in Melbourne this week and next, over its treatment of car loan customers, and problems in providing unsuitable credit card limit increases.
The major banks have been asked to hand over information about specific customers' cases, and lenders expect the commission to look at case studies where customers have been treated poorly.
As banks brace for the further hit to their public reputations, Mr Hartzer said the examples did not represent "our purpose or who we are as an organisation". He vowed Westpac's approach during the royal commission would be one of "transparency, integrity and empathy".
"We will acknowledge where we’ve got it wrong, and the steps we’ve taken to put right and make sure that the issues don’t recur," Mr Hartzer said.
The public scrutiny of Westpac's car financing is expected to include case studies of individuals who were given inappropriate car loans. Unlike some other issues to be pored over by the commission, problems with banks' car lending have received relatively little public attention.
Westpac is also set to face scrutiny after a failure to properly assess customers' employment and income when approving credit card limit increases in 2014 and 2015, because it automated some of its internal processes. Last month the bank said it had completed a compensation program relating to this problem, paying out $11.3 million in refunds to 3401 customers.
National Australia Bank is expected to be the first bank to appear before the commission, which will look into fraudulent home loan applications that were submitted via "introducers" - people outside the bank who collect a fee for referring a customer. The bank last year revealed more than 20 bankers had been sacked or resigned for breaching its policies when issuing 2300 home loans.
Earlier this year, all of the major financial institutions lodged submissions with Commissioner Hayne summarising instances of misconduct over the past 10 years, or areas where banks had fallen short of community standards.
At the time ANZ Bank handed in its submission, the bank's chief Shayne Elliott told staff there had been "significant failures over the last decade," and the document had made for "confronting" reading.
"While I firmly believe we are now on the right path, our submission shows we’ve had significant failures over the last decade," Mr Elliott wrote in January.This article was first published by https://www.smh.com.au/
Author: Clancy Yeates