SYDNEY—Australia and New Zealand Banking Group <ANZ.AX> fired over 200 staff for wrongdoing, including senior executives, due in part to issues raised at a public inquiry into financial sector misconduct, ANZ Chief Executive Shayne Elliott said on Oct. 12.
In his first public comments addressing criticism leveled at the bank in the inquiry’s interim report, Elliott said the country’s third-biggest lender would take a tougher approach to punishing bad conduct.
“We should dismiss people when they are grossly negligent or when they do things that are clearly bad and cause customer harm,” Elliott told parliament’s House Economics Committee. “My commitment is to make sure that I do hold people to account.”
In the past year, about 10 senior ANZ executives had been dismissed for issues related to misconduct, Elliott said.
The comments reflect the pressure Australia’s highly profitable major banks are under to improve governance since the quasi-judicial inquiry, or Royal Commission, exposed widespread misconduct across the financial sector.
In almost 60 public hearings, the inquiry has revealed systemic problems in incentive arrangements used to reward staff for selling products to people who did not need them or could not afford them.
According to the report published last month, all four major Australian banks also charged customers for services-not-rendered and some took fees out of dead client accounts.
The year-long Royal Commission has received more than 9,000 submissions by aggrieved customers and has scrutinized a handful of specific cases that have stunned the country.
ANZ’s Elliott said he took personal responsibility for the failures that have occurred since he took the reins of the bank in 2016 and that he was appalled by the report’s findings.
“It was pretty saddening to read the report. It made me feel embarrassed for the industry,” said Elliott, who also chairs the lobby group, the Australian Bankers’ Association.
“Seeing the impact that we’ve had on individual customers … was embarrassing and shocking.”
Elliott ordered a review of how ANZ had treated a number of clients mentioned in the interim report by Kenneth Hayne, the former-judge leading the Royal Commission.
“We have broken the trust of many of our customers for which we unreservedly apologize and there’s no excuse for that.”
ANZ said on Oct. 8, it would take a A$711 million ($506.59 million) hit to profit partly due to higher costs for compensating customers stung by poor banking practices. The bank’s full-year results are due Oct. 31.
Other banks and wealth managers are also setting aside cash to restructure their businesses, defend lawsuits and compensate customers, while bracing for tougher laws and tighter margins.
The heads of Commonwealth Bank of Australia <CBA.AX> and Westpac Banking Corp <WBC.AX> said at a parliamentary hearing on Oct. 11 that they were wrong to oppose the Royal Commission, in contrast to the industry’s defiant tone before the inquiry began in February.
National Australia Bank <NAB.AX> CEO Andrew Thorburn will face questions from politicians on Oct. 19.
By Paulina Duran