CHAIRMAN’S OPENING STATEMENT 

Thank you Chairman.

So, I do know some members of the Committee, but for the benefit of those I haven’t met, I was appointed as Chairman of the Commonwealth Bank in January this year, having been appointed the Board mid-way through last year.

I would like to make a short opening statement, and Ian Narev our Chief Executive Officer will then provide a brief update.

I will respond to questions you may have regarding the Board’s governance of the Group, while Ian is best placed to respond on operational matters.

Can I say at the outset that it is an absolute privilege to be Chairman of the Commonwealth Bank.

As one of Australia’s largest companies, and the country’s largest bank, we play a critical role in the economy, particularly in securing and enhancing the financial well-being of the customers and the communities that we serve.

Given this role, the Bank is, quite rightly, held to very high standards. And it is clear that the Bank has not always met these standards.

My commitment, and that of the Board and of executive leadership, is that CBA will strive to attain these high standards expected of it and importantly continue to serve the needs of our customers.  

In the relatively short time I’ve served on the Board I have been struck by the tangible pride our staff have in the Bank, and in the work they do each and every day.

When issues occur, our staff experience this in a very personal way, because it reflects negatively on everyone, and is at odds, not only with the values of the Bank, but with the values of our people as individuals.

In response to the concerns expressed by the Committee, and others, in recent times, CBA has been implementing a wide range of reforms, and the Board believes significant progress has been achieved. And I will ask Ian to touch on some of this in a moment.

We are conscious there needs to be greater transparency about what the Bank does, and greater accountability for the outcomes it delivers.

It is my goal as Chair to ensure that we have robust governance, accountability and risk management systems in place.

Our current focus on three lines of accountability is an example of this, resulting in clarity around the role of the front line business unit, the risk team and the third line of assurance through audit.

Let me now turn to some of the matters you will no doubt wish to address today.

I’ll start with the proceedings brought by AUSTRAC in the Federal Court against the Bank.

While we are constrained for legal reasons in what we can say, I can assure the Committee that the Board is taking these matters extremely seriously and is responding appropriately.

Immediately after we learned of the AUSTRAC proceedings in August, the Board established a dedicated sub-committee to review and oversee the Group’s response.

This oversight includes not only the response to the AUSTRAC claims, but importantly, to the ongoing Program of Action designed to improve our Financial Crime Compliance systems and processes, and ensure that we not just meet, but that we exceed our compliance obligations.

Further to the AUSTRAC statement of claim, the Board determined that it should reduce, to zero, all Group Executive short-term bonuses, and move to cancel substantial amounts of, deferred, but not yet paid remuneration of certain former executives.  The Board also imposed a 20% reduction in its 2017 directors’ fees.

I can assure the Committee that, as we do the work to understand the underlying causes and issues there will be further accountability consequences as necessary.  I also assure you that we are working co-operatively with all of our regulators.

In this context, we are already preparing for the implementation of the Banking Executive Accountability Regime. This regime, in my view, is not a substitute for the ultimate responsibility that rests with the Board and senior management to ensure that there is proper accountability at the Bank. But, it is a valuable safety net that we believe will help give the community confidence that there is appropriate independent oversight.

As Chairman, my position on accountability can be quite simply put.

Where claims of serious misconduct are substantiated, there are consequences, including dismissal.

People who underperform are supported to improve, however if their performance doesn’t improve they are also asked to leave.

But as well as strengthening accountability and compliance, as I said at the outset, it is important that the Bank provide customers with products and services that address what they  actually need and want.

Management regularly reviews our suite of products to ensure we are meeting customers’ needs and, as you will have seen, we have recently made some changes in this regard. 

I would also like to recognise the role of government, and specifically the role of this committee. The Board and executive team unanimously support the committee’s objective of ensuring that the focus on improving customer outcomes is paramount at all times.

It is one thing to be doing good work, and it’s another to be seen to be doing it, and one of the Board’s priorities is to demonstrate through clear evidence that the Bank is meeting the high standards that are rightly expected of it.

We should be judged by our actions. 

I will now hand over to Ian.

CEO OPENING STATEMENT

Thank you Catherine. And thank you to the Committee for this opportunity to appear.   

As Catherine has highlighted, as the leaders of the Commonwealth Bank we are ultimately accountable for our company’s performance, good and bad.  

I echo Catherine’s comments around the importance of transparency and openness in rebuilding trust – that is why the work of this committee is valuable, and why we support the inquiry launched by APRA into the Commonwealth Bank. 

Importantly, there has been much positive action that has arisen from the work of this committee and of Government more broadly. That is good for customers. 

In that spirit, we have engaged closely and built stronger ties over the past 12 months with representatives of more than 30 community groups and customer groups, including Choice, National Seniors, Financial Counselling Australia and the Brotherhood of St Lawrence just to name a few.  Through these regular discussions we are listening carefully to their concerns, and those of their members.   

Last month we led the industry in removing unpopular fees at our more than 3,000 ATMs.

Last week we announced a new basic credit card with 9.9% purchase interest rate; while also implementing real-time alerts for credit card repayments, overdrawn transaction accounts and high cost transactions. 

The week before we announced that around 2000 in-branch customer service representatives will be moved to a new short-term variable remuneration plan based solely on the individual’s contribution to providing superior customer service. 

And we recently confirmed we will be participating fully in the comprehensive credit reporting regime in 2018, and we’ve committed to being an integral part of the open banking regime the industry and Government are currently working on 

To conclude, this is an on-going process, as we continue to balance the interests of our customers with those of the Australian families, who directly or indirectly comprise 80% of our shareholders and to whom through our latest dividend, we’ve returned almost $4 billion, which was $3 out of the $4 we make. 

We look forward to addressing your questions.