Banks told to lift veil on exec pay wiz­ardry

Herald Sun - - BUSINESS DAILY - JEFF WHALLEY FI­NAN­CIAL SER­VICES

THE big banks and other fi­nance com­pa­nies have been asked to ex­plain their ex­ec­u­tive pay poli­cies to the fi­nan­cial ser­vices royal com­mis­sion.

Let­ters have gone out to the na­tion’s big­gest lenders and other com­pa­nies ask­ing how some of the best-paid peo­ple in Aus­tralia have their pay struc­tured, Busi­ness Daily be­lieves.

The royal com­mis­sion has asked for ex­pla­na­tions as to how com­plex parts of ex­ec­u­tive pay pack­ages — in­clud­ing short and long-term bonuses — fit to­gether.

It is also be­lieved to have sought more de­tails on com­mis­sions paid to mort­gage bro- kers and other perks lav­ished on peo­ple in the in­dus­try.

The fi­nal round of pub­lic hear­ings be­gins on Novem­ber 19. Bosses from the na­tion’s ma­jor banks are ex­pected to be called to ap­pear.

ANZ chief Shayne El­liott yes­ter­day said the bank’s top brass would take a hit fol­low­ing the wide-rang­ing rev­e­la­tions at the royal com­mis­sion.

Ap­pear­ing at a fed­eral par­lia­men­tary in­quiry, Mr El­liott said “fail­ings ac­knowl­edged to the com­mis­sion and the lack of sat­is­fac­tory progress on reme- di­a­tion will have a ma­te­rial im­pact on ex­ec­u­tive re­mu­ner­a­tion this year”.

Mr El­liott said he was “ap­palled” by the be­hav­iour of some ANZ staff.

As chief ex­ec­u­tive for the past two years, he said he was “ul­ti­mately ac­count­able for this”.

“It is com­pletely un­ac­cept­able that we have caused fi­nan­cial harm and emo­tional stress to our cus­tomers,” he said.

Mr El­liott said the bank had failed to hold peo­ple ac­count­able for poor con­duct.

But he said there had been re­forms aimed at en­sur­ing ex-

ec­u­tives knew what they were li­able for.

He ac­knowl­edged ANZ had bro­ken the trust of many cus­tomers.

Mr El­liott said the bank was work­ing to im­prove its sys­tems to re­pay cus­tomers when they were wronged.

It now has a team of 165 peo­ple work­ing to fix past mis­con­duct.

He said prof­its were “dra­mat­i­cally lower” than at any time in the past decade, but added he did not know if this was due to the com­mis­sion.

“We have been pun­ished,” he told the House of Rep­re­sen­ta­tives eco­nomics com­mit- tee in­quiry into the big four banks.

“The re­al­ity is that the sec­tor, in­clud­ing ANZ, our re­turn on eq­uity has fallen from 17-18 per cent to 11.”

Mr El­liott said com­pe­ti­tion was more in­tense than in previous years and non-bank play­ers were in­creas­ingly win­ning mar­ket share faster than the ma­jor lenders.

His ap­pear­ance came af­ter Com­mon­wealth Bank chief Matt Comyn and West­pac chief Brian Hartzer fronted the com­mit­tee on Thurs­day.

Mr Comyn said the CBA should have bet­ter pro­tected cus­tomers in­stead of pro­tect- ing com­mis­sions for fi­nan­cial ad­vis­ers.

Mr Hartzer said his bank had also not han­dled the in­tro­duc­tion of Fu­ture of Fi­nan­cial Ad­vice re­forms — back in 2014 — as it should have.

Na­tional Aus­tralia Bank chief Andrew Thor­burn will ap­pear at the third day of the in­quiry, next Fri­day.

The hear­ings come two weeks af­ter bank­ing royal com­mis­sioner Ken­neth Hayne de­liv­ered an in­terim re­port blam­ing greed and the pur­suit of profit for wide­spread mis­con­duct in the bank­ing and fi­nan­cial ser­vices in­dus­try.

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