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20 April 2017

ABC Brisbane Mornings – Interview with Steve Austin

Subject: Banking Inquiries and implementation of recommendations

Kate Carnell: When we undertook our Inquiry it was 17 (inquiries into banking) and since then there has been our Inquiry, one by Steve Sedgwick into payment approaches and bonuses  and so on in the banks and also Phil Koury’s Inquiry into the Banking Code of Conduct.

So since the 17 there have been another three. So you can see there are lots and lots of inquiries with very similar recommendations and so far very, very little action.

Steve Austin: Now yesterday Steve Sedgwick released his report into remuneration methods by banks, sometimes known as CEO bonus payments or what have you. He came up with 21 recommendations, but I don’t think he thought there was a direct link between bonus payments and CEOs and their corporate behaviour. Or was there?

Kate Carnell: I think what he said was that there is no systemic relationship between and the banks’ behaviour, but then he went into a whole range of areas where he thought there needed to be change and change quickly.

And they were things like small business, an area that we are obviously keen on, and home mortgages and even mortgage brokers.

There is a whole range of areas, in fact Steve Sedgwick said there was no time to lose. Fundamentally, the banks need to change and they need to change quickly.

He gave them a maximum three-year timeframe that suggested they needed to get underway quickly.

One of the things he said was interesting because it was the same thing that came up in our Inquiry. That was the comment by the banks: “Oh ye, but none of us can move unilaterally because if we do  it could undermine our competitiveness. So we all have to wait until we all agree and act as an industry.”

And Steve has the same response as we do: “Look we are sick of waiting, we have got to get moving now, so get on and do it and do not use the excuse that we have to somehow get consensus of the whole banking industry before we can make any real change.”

Steve Austin: Steve Sedgwick’s report into CEOs bonuses and pay is somewhat swamped yesterday with news of changes to the 457 visas. It has not received much coverage. Are you taking that it essentially echoes or mirrors the work that you did – what happened to your recommendations? I think there were 11 recommendations out of your Inquiry, Kate Carnell.

Kate Carnell:  There were 11 for the banks and four for the Government, so there were 15 altogether. We gave those to the Government in December last year and they released them, I think it was in late February.

The problem we have got is that we have not had an official response from the banks at all.

The Government’s Economic Committee asked the banks some questions about our recommendations, but we still await the banks response.

And I suppose the point that I am making is that a lot of the recommendations are the same as we have seen for a very long time now.

Things like recommendations on non-financial defaults. I am sure your listeners agree as I do, that if you borrow money from the bank and you are a small business and you pay back what the bank tells you have to pay back every month and on time that should be all that you have got to do.

But there are clauses in bank contracts that allow banks to foreclose on you for a whole range of different reasons – that the housing market goes down a bit, your turnover is not as good as they would have liked or you would have liked.

The fact is that you are still paying. There are a whole range of areas that the bank can default your loan when you are still paying what you are supposed to on time.

We are suggesting that is simply not reasonable and certainly not in line with community expectations.

So there are a range of recommendations that we have put on the table, which we think would help, particularly in the small business space, and I think the time has come with Anna Bligh in that role.

She has made all the right noises to start with about there needing to be change. The challenge is now actually getting change in something like a decent timeline.

Steve Austin: Kate Carnell thanks for your time.

Kate Carnell: Thanks Steve