The Commonwealth Bank (CBA) has expressed its total support for Banking Royal Commissioner Kenneth Hayne’s recommendations and signalled how it is already acting on many of them as it seeks to rebuild trust in its business.
Its chief executive, Matt Comyn, told the Standing Committee on Economics today that the bank was focusing on addressing past failings, strengthening internal governance, culture and accountability, and focusing the business on delivering for customers to improve trust.
While CBA had already signalled its intention to remove grandfathered commissions, arguably the most significant of Hayne’s financial advice recommendations, Comyn said that the bank would move to implement all the advice suggestions.
The bank was moving to a new model with its salaried advice channel, Commonwealth Financial Planning, where customers would only pay once service was delivered. CBA would also develop new models in its other advice businesses once legislative requirements meeting the advice recommendations were finalised.
Regarding concerns about conflicts of interest, Comyn said that, consistent with a recommendation from Hayne, CBA would “soon be” updating its customer communications to explain simply and concisely why their advisers weren’t independent, impartial and unbiased.
Comyn said the bank had already acted prior to the Royal Commission on stopping conflicted remuneration practices for advisers, as well as already taking a strong stance on misconduct by financial advisers. He said the bank also already reported serious compliance concerns regarding advisers to ASIC, but that it would make changes to this process once the regulator released new guidance.
Regarding superannuation, Comyn expressed support for all Hayne’s recommendations and said that the bank would implement them once legislation was finalised on each issue. He said that CBA already didn’t engage in hawking or treating of employers, the banning of which was advocated by Hayne.
The CEO took a similar stance on insurance, saying that the bank supported all recommendations and would implement them once legislated. The exception was Hayne’s suggestions on life insurance, which Comyn acknowledged but said didn’t apply to the bank now that it had agreed to sell its life business to AIA.
Comyn said the bank was improving its culture generally, supporting the extension of the Banking Executive Accountability Regime (BEAR) to improve governance practices. He also said that “work is well underway” to improve culture and governance through its Prudential Inquiry Remedial Action Plan, and that CBA supported Hayne’s recommendation that the Australian Prudential Regulation Authority (APRA) supervise practices in these areas.
On regulation, Comyn said that CBA supported recommendations to improve its interactions with regulators, but noted that the bank had already taken steps to self-report contraventions and have open, constructive and cooperate dealings with the watchdogs prior to the Final Report.
Comyn also announced that his deputy, David Cohen, would chair a Royal Commission Implementation Taskforce at the bank.