You may recall I published some analysis mid-week expressing some sympathy for Australia’s banks. After the first few days of hearings at the banking royal commission, I found myself feeling sorry for them (to my surprise) as the victims of a witch-hunt and blame game determined to pass the responsibility for a business’ failings onto someone else.
Yet as the week went on, my view very abruptly changed course. Example after example came forward of banks and their staff making, not just one mistake (which we all, as humans, are prone to doing), but making a litany of major compliance and policy failures, and then trying to cover up these errors at any cost.
On Thursday, we heard of how a senior Commonwealth Bank manager delayed reporting a technical glitch that was double-charging thousands of business customers until after a parliamentary hearing was conducted, in a bid to avoid extra scrutiny and negative PR.
Then we heard of how Westpac-owned Bank of Melbourne wrongly issued a mortgage as a residential loan rather than a commercial one, and when discovery of the bank’s error resulted in an uncomfortably high-risk profile, the bank “forcibly quarantined” $100,000 of the customer’s money “for [its own] comfort” — despite that money coming from the settlement of a property not at all attached to this loan.
And on Friday, it was revealed that Suncorp, having been found to have issued a loan irresponsibly, tried to force the borrower’s widow onto payment terms that were even less favourable to what she had requested help for to change.
Yes, I admit they are just isolated examples, but all of them and more have formed a common pattern of behaviour among the banks critiqued so far:
- Deny, deny, deny – ignore there is a problem until it goes away
- Recognise there is a problem, but push its consequences (costs) onto the customer
- Don’t ask, don’t tell – even where the Financial Ombudsman (FOS) finds wrongdoing on the bank’s part, don’t investigate what went wrong or take any action to improve things so as to avoid a similar outcome.
Indeed, Westpac’s head of commercial banking, Alastair Welsh confessed that, despite a series of actions potentially amounting to misconduct and admitting that they were in breach of both Westpac’s policies and the expectations given under the banking code of practice, he has not bothered to speak with the individuals concerned, nor is there evidence that any form of disciplinary action was taken.
I’m sure that SME owners will be the most aghast to this kind of approach. Smaller businesses know that their very survival depends on how they treat their customers. They know that a bad customer experience directly hits their bottom line.
As such, they know that any customer problem is their problem, and one that needs their attention to resolve and to avoid repetition.
The royal commission hearings suggest that the exact opposite is true. Blinded by the billions of dollars they are raking in annually, they see customers as a means to an end rather than the core of their business. And laws are apparently just a challenge to circumvent, rather than a compulsory guide of propriety.
The responding approach is to avoid looking into any problem at all cost, unless forced to, and even then only do the bare minimum. But as we are currently seeing, this approach only lasts for so long until it blows up in your face and creates a much bigger headache than the original problem ever could have.
Follow the royal commission hearings live on the My Business blog.