How far can banks press general advice?
The Commonwealth Bank has confirmed the degree to which has looked at how far it can go within the constraints of providing general advice to customers.
Commonwealth Bank chief executive, Ian Narev has confirmed to the House of Representatives Economics Committee that the bank has been examining how it can have “richer discussions” with people particularly in areas such as mortgages and borrowing.
Under questioning from NSW National Party member, Kevin Hogan, the CBA chief executive acknowledged the work the bank had been doing with respect to how much customers should borrow.
“In the context of the broader regulation on general advice versus specific advice, we have a lot of discussion about that at the bank; and it is a very live discussion both through our own channels and through proprietary channels,” Narev said.
He said that, historically, there had generally been a view that 'whatever the bank will lend me I should borrow' and that the bank sought to lend responsibly for what people could service.
“But ultimately the question of what level of debt somebody is comfortable with is very personal,” Narev said. “The whole industry—and we are certainly doing it, including through behavioural economics in conjunction with academics from Harvard University—is working through how, within the constraints of the law on advice, we can have richer discussions with people to go down exactly the distinction you've drawn.”
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