AUSCRIPT AUSTRALASIA PTY LIMITED ACN 110 028 825 T: 1800 AUSCRIPT (1800 287 274) E: clientservices@auscript.com.au W: www.auscript.com.au TRANSCRIPT OF PROCEEDINGS O/N H-896299 THE HONOURABLE K. HAYNE AC QC, Commissioner IN THE MATTER OF A COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY MELBOURNE 9.46 AM, THURSDAY, 24 MAY 2018 Continued from 23.5.18 DAY 23 MS R. ORR QC appears with MR M. HODGE QC, MR A. DINELLI and MS E. DIAS as Counsel Assisting with MS C. SCHNEIDER MR M. DARKE SC appears with MS P. NESKOVCIN and MS A. SMITH for Westpac MR N. HUTLEY SC appears with MR B.A. McLACHLAN and MR T.M. DOWLING for Bank of Queensland MR C. SCERRI QC appears with MS Z. HILLMAN and MR K. LOXLEY for CBA
case the deep dive identified a problem. And, unfortunately, that’s the nature of – of any kind of business like this. There are always problems that you then need to fix. And the resolution that’s referred to here is that there was a referral control implemented which would mean that the – a decision would be referred to a credit assessor, who would then make a manual decision. And then a permanent fix was done in March. I am not sure what the timing was relative to that paper. I think it was October. My question to you – my question to you, though, just focused on the fact was there any analysis done as to whether or not that issue resulted in increased defaults for people who have been approved for an SBO during that period?I couldn’t tell you off the top of my head. Can I – Commissioner, if I tender that document. THE COMMISSIONER: Small business risk subcommittee agenda and accompanying documents, 26 May ’16, CBA.0001.0174.1189, exhibit 3.45. EXHIBIT #3.45 BUSINESS RISK SUBCOMMITTEE AGENDA AND ACCOMPANYING DOCUMENTS DATED 26/05/2016 (CBA.0001.0174.1189) MR DINELLI: Thank you, Commissioner. If I can take you, Mr van to CBA.0001.0332.1047. Now, you’re not party to these emails, but do you know who Christopher Essex is?I do. And what is his role?He is in the credit risk team, one of the credit specialists who after this portfolio. I see. And if you go down the page, there’s an email from a Megan Eldridge. Is she also part of that team?No, it looks like, from the signature, she’s a frontline staff member. I see. And she has there said: Please see attached the two screenshots from the calculator. The first is prior to inputting the expenses and the second after the personal living expenses are added. The net monthly surplus does not change. Do you see that?Yes, I see that. And does that demonstrate that – or is that an error in relation to the serviceability which was the subject of this email?No. I don’t think it was an error. What I think the frontline staff member is saying, well, I put in a number and nothing changed for the net surplus. You would recall from the consumer of hearings
Continuing: Please review for waiver of the debt. ?Yes. And in fact – perhaps I can tender that email before I go THE COMMISSIONER: Email 28 July ’15 to C & CS escalation, CBA.0001.0281.0182, exhibit 3.48. EXHIBIT #3.48 EMAIL TO C & CS ESCALATION DATED 28/07/2015 (CBA.0001.0281.0182) MR DINELLI: Then – thank you, Commissioner. The next document is CBA.0001.0281.0194. Do you see that? Sorry, Mr van Horen?Yes, got it. And it says, in the middle of the page – and this is approximately a week later: As discussed, please your approval to waive the debt of $3494 as a commercial decision to resolve the matter. Do you see that?I do. So it was when the person threatened to go to the media, then CBA increased its offer there. Do you see that?I do. And there was two reasons for CBA wishing to have this dealt with speedily. One was the bad PR?Fair to say. One was also the fear of it being identified as a systemic issue?I wouldn’t – yes, I wouldn’t extrapolate from – I don’t think that’s a fair extrapolation from that one person’s email, because certainly from my point of view – and I think this is a widely held view – if there is a systemic issue, we want to know about it so we can fix it. But the process ?I wouldn’t be comfortable saying that that was a CBA view. No. Perhaps I can put it this way?That was very much against policy, what you saw there, as well. I have checked that. So the process failed in this case?It did. Now, ultimately, there was a remediation program, wasn’t there?Yes.