ABA’s opening statement to the House Economics Committee

ABA CEO Anna Bligh appeared before the House Economics Committee – Smaller Banks Inquiry on 1 July 2021.

The Australian Banking Association, Bank of Queensland, Beyond Bank, HSBC Australia, ING Australia, Volt, Judo Bank, Teachers Mutual Bank Ltd and Unity Bank appeared before the House Economics Committee on 1 July.

The public hearing is part of the committee’s ongoing Review of the Four Major Banks and other Financial Institutions and will be conducted via videoconference. The smaller bank sector last appeared before the committee in November 2019.

Anna Bligh began proceedings with a 45 minute Q&A. Her prepared opening statement is included below.

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Opening Statement 

Thank you for the opportunity to appear before you today. 

It’s been almost two years since smaller banks and the ABA were called to give evidence so I’m pleased to provide you with an update in a range of areas before taking your questions. 

Like the rest of the nation, Australia’s banks have come through a momentous period.  Great challenges were met and great challenges were overcome in the interests of customers all over the country. And as we’ve seen in recent days – more trials are upon us again. 

Over the past 18 months, banks large and small acted early, standing in the eye of the storm and absorbing the blow for their customers by deferring repayments on a million loans for families and small businesses. 

Together with the strong support from Government, banks were able to get their customers through the worst.  

If ever we needed a demonstration of why a strong and stable banking sector is good for the country, this was it. Without strong and stable banks, this crisis would’ve been much worse.  

Banks are now helping Australians overcome the latest wave of this pandemic, by offering individualised tailor-made support for businesses and families plunged into lockdown once more. 

Once we’re through this – banks are ready to help their customers power out of the crisis and never look back.  

Banks are reporting that economic conditions, generally, are good. Interest rates are at an all time low. Lending and refinancing are at an all time high. Cash and deposits at banks are at levels never seen before, sitting at more than $234 billion, up from just $70 billion in February 2020.  

This means that more Australians are getting the chance to purchase their own home and that is a good thing. Importantly, lending standards are solid. Banks understand the imperative to lend responsibly and they are meeting that requirement. 

It’s more than two years now since the final Report of the Royal Commission was released. As I sit here today I can report to you that a lot has changed. 

The vast majority of recommendations are either complete or underway – and those still to commence are awaiting parliamentary approval. 

Banks are putting customers first.  

They’ve transformed their culture.  

They are complying with stronger laws.  

And they’ve been held to account. 

I’m pleased to inform you that the former Public Service Commissioner Stephen Sedgwick has now completed his final review of the implementation of his recommendations for changes to remuneration of front-line staff. 

Mr Sedgwick found that the industry’s policies have changed. Links between bonuses and sales are now rare. To quote; 

“These are substantial achievements… the risks of mis-selling and poor outcomes for customers in retail banking are substantially reduced.” 

I’m also pleased to advise you that the triennial review of the Banking Code of Practice will commence today. This enforceable code was updated after the Royal Commission. Now the industry is acting to ensure it remains up to date and relevant for the times.  

The independent review will be conducted by Mike Callaghan – long-time Treasury Deputy Secretary and the former Chair of the Retirement Income Review. 

This review will aim to strengthen the Banking Code of Practice and make absolutely sure that banks continue to act in the best interests of their customers. 

As an industry we welcome the Government’s focus on deregulation and the digital economy. This is particularly important for smaller banks, which often don’t have the resources of the majors to climb the mountain of regulation, requirements and standards placed before them.  

The banks you will be talking to today bear the brunt of the regulatory burden, with no adjustment for size in comparison to other regulated entities. 

They need an efficient, competitive and level playing field.  

COVID-19 achieved one good thing – it pushed state, territory and federal governments to do away with laws and regulations that slow us down and make doing business or buying a home harder. Allowing the electronic execution of documents was one of those changes.  

Witnessing and signing documents in person can add days to the approval process. It’s a chore that no one needs or wants and in this day and age it’s just not necessary. The Government was right to provide temporary relief. But that relief has expired. We welcome the exposure draft legislation released by Treasury last week to make this change permanent, and we urge the parliament to support it.  

In conclusion, regional and international banks play a vital role in communities across Australia. They stand ready to continue supporting their customers as we come out of the pandemic. 

I’m happy to take your questions. 

Anna BlighHouse Economics Committeenon-major banks