Ian McPhee, who is overseeing bank attempts to rebuild public trust, is urging industry leaders to keep a close eye on corporate culture, so that customers actually benefit from a shake-up of banks' policies.
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As banks get close to finalising sweeping changes designed to repair their battered reputations, Mr McPhee, a former auditor-general appointed by the industry, emphasised the importance of leaders remaining keenly focused on their organisations' culture into the future.
It came as ANZ Bank revealed the latest breach by a major lender, as it agreed to a $5 million fine for failing to properly assess car loan applications that included fraudulent documents.
Banks are under pressure to focus more sharply on their customers' interests, and Mr McPhee has been retained by banks to monitor their progress in carrying out a 2016 reform package, which has included changes to policies on remuneration, whistleblowing, and conduct.
Banks were generally making good progress in these areas, but he stressed this was only part of the solution. Embedding a culture centred around customers should not be an "end point," but rather, an "enduring goal" for banks, he said. And achieving this would require ongoing involvement from top leaders.
"It's one thing to deliver the policies and processes, but it requires the leadership.. to make sure the new processes are embedded and become part of the culture," Mr McPhee told Fairfax Media.
Mr McPhee's comments highlight the major task facing banks as they attempt to win back the trust of customers, which has been badly damaged by scandals and misconduct over recent years.
Survey figures released this week by the Australian Bankers' Association found only 32 per cent of customers trusted the industry as a whole, up marginally from 31 per cent six months ago. Fifty-six per cent trusted their own bank.
Mr McPhee's latest report said many of the measures, announced in 2016, were progressing as planned, but six banks had not met the deadline to publish "overarching principles on remuneration and incentives" by the end of last year.
AMP Bank, Arab Bank, HSBC, ING Direct, MyState and Qudos Bank did not meet the deadline, and Mr McPhee said this was "disappointing," though they would publish the documents before April.
"This is a disappointing development given the attention devoted to this initiative by those participating banks that achieved this milestone step, as well as the level of public interest in this area," Mr McPhee said in the report.
For ING, AMP, HSBC and MyState, it is understood the delays have occurred because the banks have not yet published corporate documents such as annual reports that will include the remuneration principles.
Meanwhile, ANZ on Thursday admitted it had not properly verified customers' income in loans submitted by brokers who submitted false documents for car loans.
ANZ admitted that for 12 loans, which were made between 2013 and 2015, the bank did not take "reasonable steps" to verify a customer's financial situation, which is an obligation of lenders.
On top of a $5 million fine, ANZ said it would provide about $5 million in compensation for 320 customers who were likely affected by the fraud.
The bank said it detected the dodgy loan applications and reported them to ASIC, and it had since beefed up its supervision and training of brokers.
"ANZ has worked closely with ASIC on its investigation of this matter. We take our responsible lending obligations seriously and we have since taken steps to strengthen our ability to prevent and detect fraud by third parties," the bank's group executive for Australia, Fred Ohlsson, said.
ASIC is also taking action against the three car finance brokers that submitted the loan applications.