Westpac has told the banking royal commission it is opposed to many of the inquiry’s recommendations in its interim report, including banning commissions for mortgage brokers and making industry codes legally enforceable.
However, it conceded the decision by Australia’s major banks to move into wealth management had “clearly not” been a success from the consumer’s perspective and admitted its own attitude towards regulators had been deficient in the past.
Meanwhile, James Shipton, the head of the Australian Securities and Investments Commission (Asic), was forced to explain why he holds frequent informal meetings with bank bosses but does not take notes of their discussions.
He also admitted there was a risk that Asic might appear to be “too friendly” with the major banks, conceding Asic ought to “name names” more frequently when it publishes reports on bank misconduct.
The Westpac chief executive, Brian Hartzer, told the commission he was opposed to many of the recommendations in its interim report but insisted Westpac was not averse to change.
Hartzer said he was opposed to: prohibitions on authorised representatives recommending a product manufactured or sold by the licensee, bans on volume-based commissions for financial advisers, bans on trail commissions for intermediaries, requiring annual opt-in notices for ongoing fee arrangements, imposing a structural separation between product manufacturers and advisers, and giving industry codes legal effect.
Michael Hodge QC, senior counsel assisting the royal commission, asked Hartzer to confirm his opposition to them.
Hartzer replied: “You would have to go through each one and I’m happy to explain our view on them.
“The way you described that sounds like we’re completely opposed to change, which we’re not, but each of those points has subtleties around them.”
Hartzer conceded that Australians had not be served well by banks moving into the wealth management business. He said when Westpac and other banks moved away from traditional banking services, into financial planning, they did not properly think through what that model should be.
Senior counsel assisting the royal commission, Michael Hodge QC, asked: “Do you think that, from the consumer’s perspective, the way in which Australian banks have gone into wealth management has been a success?”
Hartzer replied: “I think, at a high level, clearly not.”
Shipton, the head of Asic, was also forced to explain why Asic officials had been holding informal meetings with the heads of Australia’s banks but not taking notes. Shipton said it was to encourage a more frank discussion but he said the practice would change from now on.
Commissioner Kenneth Hayne asked Shipton: “Would not having a note-taker at these meetings ensure that there was a method of preserving the corporate memory within the organisation of what has been said, when it has been said and what was said?”
Shipton replied: “Yes. I agree with that, commissioner, and I think, in part, that was the intent behind having one of our senior executives for the first time attend these meetings in recent times.”
Shipton said he was mindful how such meetings could be viewed by the public.
“That somehow this would be seen by the other side as too familial, too friendly, too social,” he said.
