Legitimate concerns about trust: CBA

Commonwealth Bank chief executive Ian Narev has conceded that the bank “can and must” do a better job of addressing ongoing cultural issues eroding public trust in the national banking system.

With CBA due to appear before the House of Representatives Standing Committee on Economics as part of the government’s review into four major banks on Tuesday 7 March, Narev told AB+F the bank had to accept work remains to be done to rein in the banking sector’s reputational disintegration.

“We have to accept we’ve got work to do and show we’re doing that work,” Narev said. “And that includes being willing to front up to public forums and to speak very openly. We’re the first to acknowledge in a number of different areas there is weaker trust in the banking system than we would like.”

In a week when Australia’s largest bank beat consensus estimates of $4.83 billion first-half profit, the Auckland-born CEO delivered an equally polished performance to the nation’s media.

Narev told reporters that CBA and the other major Australian banks were not shying away from “legitimate concerns".

“I’ll repeat it again, we understand there are legitimate concerns about trust in the banking system," he said yesterday. "You certainly won’t hear from us - or indeed I don’t think from any of the major banks - that we just don’t understand or we think that’s wrong.

“We understand that exists, we understand we’ve got a job to do.”

Seven independent reports

Narev said the bank not only had to address the internal challenges of a selling vs service culture, but also “do a very good job of communicating that".

“There is work to do on both fronts,” he said. “And we’ll be quite open about that. We’re making a specific point of saying what have we done in the last six months to make our business better for all customers and not just the vast majority."

The bank chief told gathered media in Sydney that he had delivered a new Deloitte report into remuneration and other cultural issues across the banks troubled insurance arm, CommInsure, to the CBA board on Monday.

Narev also cited seven independent reports undertaken as part of CBA’s ongoing advisory program as core examples of the bank’s processes of accountability.

“And the other thing we do as part of that is to make sure that where concerns are raised we look at them hard and, if necessary, with external input," he explained.

“With the open advisory program, we’ve just seen the seventh independent report from a globally recognised firm (Promontory). And with CommInsure we’ve had three independent reports and a fourth done, that said there was no problems with remunerations systems in terms of customer outcomes.

“It paints a picture of a good business and one that’s at odds with some people’s perception of it.”

Narev was quick to add, “none of that alters in any way our determination to do our best for every customer".

“Despite the fact these reports say the business overall is doing well. We can and must do a better job.”

CBA yesterday announced first-half cash earnings of $4.91 billion.

CBA, result, culture, trust
Christian Edwards, cedwards@financialpublications.com.au
Article Posted:
February 16, 2017

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