CBA chief executive Matt Comyn has admitted that the failings around its advice business boil down to a culture of “not learning from issues of misconduct in the past”.
At the seventh round of hearings at the Hayne royal commission, senior counsel assisting Rowena Orr asked Mr Comyn about the key things CBA did not understand about the relationship between its advisers and their customers.
“Why didn’t CBA understand and appreciate the obligations attached to each of those relationships?” Ms Orr asked.
“I think we should have, Ms Orr,” Mr Comyn said.
“And why didn’t you? What do you put that down to, Mr Comyn?” Mr Orr said.
“Well, a culture of us not learning from issues of misconduct in the past,” Mr Comyn responded.
“What has become clear … when you look alongside the various case studies that I was asked to prepare as part of my witness statement, as you said, there are a number of recurring themes.
“And ultimately, that’s why I say we get into a period of ongoing remediation without actually fundamentally understanding the root cause in each of those matters and making demonstrable steps to ensure that they don’t reoccur.”
Ms Orr asked Mr Comyn if he learned anything about the 500 or so responses to a letter he sent to senior executives in attempting to address CBA’s internal culture.
“Everything from, I mean, a feeling, obviously, of disappointment, embarrassment, very much an acceptance of some of the key issues that were there, in terms of our inability to escalate/resolve conflict,” Mr Comyn said.
“Too much of a focus on things like collaboration, which had unfortunately become, I believe, a real weakness inside the organisation. Not enough capability in the management of non-financial risk, particularly in operational risk and in compliance.
“A focus on how they would lead a much more constructive and challenging raising of issues and also issue closure, and a lot of acceptance around the sorts of investment that will be required to ensure that we not only meet our compliance and legal obligations, but we’re also in line and exceed in many areas [of] the broader community and regulatory expectations, which I totally accept is some distance from where we are today.”
Ms Orr’s questioning also moved to what Mr Comyn believed was the hardest cause for CBA to fix.
“I think we may explore that in the context of AML/CTF (anti-money laundering/counter-terrorism financing), we have an enormous amount of work to do to improve our management of non-financial risk,” Mr Comyn responded.
“But as the chief executive, of course one of my primary issues is ensuring that we have a culture which has learned from the areas and issues of misconduct and we are a very different organisation for our customers going forward.
“And an exercise such as that which is, of course, a complex interplay of various factors, will take time. And there are many ways which I, with the support of my leadership team and, of course, working closely with the board, will need to make sure that that transition is successful.”
Mr Orr then asked Mr Comyn if management of non-financial risk will be the most difficult thing to fix.
“I actually think the larger change [is] around the culture of the organisation. That is, in some ways, harder to measure,” Mr Comyn said.
“And obviously the management of non-financial risk has been a clear failing in a number of different matters, but that is something I feel will be more readily observable and measurable.”
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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