A suggested way to drive better corporate behavior
With all that has gone on with the Commonwealth Bank in both the insurance space and the banking area, particularly the reported practice with children’s Dollarmite bank accounts, all of which is so far from my and our organisation’s values that I spoke to our board and suggested that we move banks. It was a unanimous agreement that we make the move.
As an aside, I started my loss adjusting career, like so many, at the then MBS Loss Adjusters handling Commonwealth Bank Insurance claims. They were an excellent company that genuinely embraced the first principle of general insurance, that is utmost good faith. Now, I would never insure with them.
With the board sign off, we started the process recently only to find that Westpac, the one we chose due to the positive way they acted after a cyber scam where our bank had failed us, has now been caught up in its own scandal that makes the CBA pale into insignificance.
As a friend of mine pointed out, if the CBA received a fine of $700 million for some 53,506 failings to report transactions, then Westpac’s is going to make your eye’s water.
With Westpac, it is alleged that there are 23,000,000 failings.
If we assume the same penalty per failing that was to be applied to the CBA of $13,082.64 [$700,000,000 ÷ 53,506] to the 23 million alleged failings here we get a fine of $300,900,833,551.38.
Despite this, the CEO of Westpac wishes to retain his job. There has to be a time where you put the organisation above yourself and to me, this is one of those times and of course he should not be alone.
The Business Council of Australia claims to be working to rebuild trust in the community. The insurance industry is doing the same. How can any customer or shareholder have trust in an organisation where the leader remains in place after such a failure.
It would appear that people within the bank have been dishonest, reckless or incompetent. Those in this category also need to go.
While we have seen a marked change in the approach of boards to work place injuries and death when Directors could be found personally liable, there appears to be little or no change in culture when it comes to greed and a failure to do the right thing by the law and/or their customers.
This, of course, is not the only example where an organisation and those in senior positions have not learned anything from the Hayne Royal Commission.
My thought is that in cases like this, if senior management and directors were to forfeit all bonuses, shareholdings and the like and that any golden handshake provisions in employment contracts were made null and void so that no payment was to be made for failure, on top of the personal responsibilities at Common Law and under the Corporations Act 2001 (Cth) then we would see some positive change in Corporate culture.
Meanwhile I will go off and see if I can find another bank, one we can trust. Wish me luck!
(EDIT: 27/11/2019) PS. I am pleased to see that he has now decided to stand down, but I still believe it should not be him alone and the Chairman bringing forth his retirement is likewise a mediocre response to what appears to be a serious failure.
The other issue that really needs to be addressed in this country is whistle blower laws as it has now come out that the person who brought the matter to a head within Westpac, has been relieved of their duties.