Finance Analysis

Commonwealth Bank is a disgrace to the public interest

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The Commonwealth Bank is a travesty of the former institution created to serve the public trust (Image by Dan Jensen)

The Commonwealth Bank, while publicly claiming to be an ethical bank, privately tells its perennial victims to go away, rendering them invisible, writes Dr Evan Jones.

This is part two of a story. You can read part one HERE.

THE TREATMENT of Suzi Burge is more convoluted and ultimately telling. On 13 August 2014, the Financial Ombudsman Service (FOS, now the Australian Financial Complaints Authority/AFCA) issued a determination finding maladministration in lending, accepting the reality of CBA misrepresentations.

It was nevertheless a deeply flawed determination. In spite of the “maladministration” finding, FOS imposed no demands on the Commonwealth Bank (CBA) to make proper restitution to Burge as per FOS guidelines.

Deputy CEO David Cohen appeared before the Parliamentary Joint Committee on Corporations and Financial Services during the Impairment of Customer Loans Inquiry on 4 April 2016. Committee members brought up specifically the Burge case (Submission no.63), especially at p.38 of the hearing transcript. The Chair (Liberal Senator David Fawcett) cited internal CBA documentation that noted that Burge’s asset security was “comfortable” but “recognised that [the] ability to repay the loan was questionable”.

In other words, the Burge loan was knowingly asset-based, essentially predatory. Fawcett continued: “Yet the bank made the loan. Why do you do that?”

Cohen claimed, “That is not the general practice”. This claim, of course, is another misrepresentation. Either Cohen is negligently uninformed (inexcusable for a senior executive) or he is lying. Asset-based predatory loans are a perennial practice. Unfortunately, members of parliament decline to become informed on such matters.

Fawcett again:

“How would that have slipped through your system?”

Cohen:

“It should not have. Our systems and our processes are designed for that not to arise.”

Another misrepresentation.

Fawcett:

“In this case, it was looked into. It was lodged with FOS and FOS found that there was maladministration within the bank over that loan. What action was taken against individuals within the bank who were part of the process?”

Cohen:

“If there was maladministration – and it sounds like it was proven in this case, at least as found by FOS – normally in those circumstances we would look at the individual concerned and their conduct...”

No such investigation took place.

Fawcett:

“...if the bank or lending institution is found to be at fault, FOS will seek to restore the consumer to the position they would have been at prior to that loan or if that loan had not been made. Do you support that as a general principle?”

Cohen:

“Yes, generally we do.”

Rather, it is a “general principle” honoured in the breach. No restitution was made to Burge.

Cohen later added:

“From our perspective, we try to ensure that we give excellent service to customers and that does not just mean in the lead-up to entering into a transaction; it also means afterwards.”

This claim, of course, is absolute rubbish.

Cohen soon wrote to Burge on 5 May 2016. Cohen claimed that Burge had not fulfilled her responsibilities in repaying debt after the FOS made its final determination in August 2014. Bizarrely, as noted, FOS acknowledged and confirmed the bank’s maladministration of the loan — quintessentially predatory. Yet FOS did not demand that the bank cancel Burge’s formal debt, as per its own rules, but left Burge (arbitrarily and illegally) with a residual debt. Cohen hones in on the supposed debt but neglects the fact of the bank’s maladministration.

Cohen continues:

“This matter was fully and finally settled by the Deed of Settlement and Release that you freely entered into with the Bank on 7 March 2016 in the presence of your barrister, Mr James Kewley.”

“Freely entered into...”? You have to be joking. The CBA’s solicitor (Patrick Lunn) and barrister (Philip Jackson SC), in collusion with Burge’s supposed barrister (Kewley – note that Kewley did not represent Burge in the two court cases listed on his site) held a gun to her head. Cohen, of course, knows that.

At the 7 March meeting (in the Jury lunchroom in the afternoon during a Launceston Supreme Court hearing presided over by Justice Pearce), Jackson threatened Burge (in front of Lunn and Kewley) that the CBA and the Australian Banking Association would throw money without end to prevent her ever gaining satisfaction. Burge complained to the Legal Professional Board of Tasmania (LPBT) regarding Jackson’s alleged abuse.

Jackson, in a 23 February 2017 letter to the LPBT, denies that he threatened Burge. Jackson claims that Burge’s complaint was ‘vexatious, misconceived, frivolous and lacking in substance’. Given that Burge’s account of the day’s events is comprehensive, I prefer to take Burge at her word.

Jackson also claims that Kewley had led the charge because Kewley couldn’t by himself overcome Burge’s persistent refusal to sign the Deed. And for good reason.

Here are some sections from the Deed:

5. Burge releases and forever discharges the bank from all and any liability past, present or future and from all claims suits demands actions [sic] or proceedings arising out of or connected with...

 

6. Burge will withdraw any complaint made to the Financial Ombudsman Service, the OAIC, ASIC, Tasmania Police, the Australian Federal Police and any state or federal authority...

Burge has been trying to get this illegally constructed and imposed Deed overturned ever since. When Burge sought assistance from the Office of the Australian Information Commissioner (OAIC) in 2017, CBA operatives claimed that the aforesaid Deed precluded the bank from cooperating with the OAIC.

In his letter to Burge, 5 May 2016, Cohen goes on to claim:

‘Commonwealth Bank has provided multiple extensions of time to allow you to obtain finance from an alternative provider.’

Rather, Burge had several alternative finance providers lined up (one of which was Aussie Home Loans) but the CBA warned them off. The original fraud is enhanced by sadism overlaid by lies.

Fronting the Parliamentary Committee, Cohen plays concerned professional (which satisfies the lukewarm parliamentarians). Behind the scenes, Cohen plays the enforcer.

Burge subsequently had a minor victory. The Banking and Finance Oath (BFO) was established in 2013. Its existence, by the way, is a de facto acknowledgement that the Banking Code of Practice is a joke. A Banking and Finance Ethics Panel was established in 2010 to formulate the BFO and on that Panel was... David Cohen!

Following Burge’s communication with BFO, on 27 March 2018, the BFO Review Panel (Jillian Broadbent at head), wrote a letter jointly to Burge and Cohen. The Review Panel claims to ‘make rulings in proceedings relating to the interpretation, application or effect of the oath’.

The letter continues:

‘It would seem you [Cohen] have lacked an element of sensitivity and indeed appreciation of Ms Burge’s position.

 

Even though you had nothing to do with the original issue, one would hope that the Oath would have had a greater impact on your behaviour.’

Cohen was kicked off the BFO Review Panel. As for Cohen being ‘personally not responsible for Ms Burge’s situation’, on the contrary. After 4 April 2016 (the parliamentary hearing), Cohen became formally responsible, yet within a month (the letter of 5 May 2016) he had knowingly reinforced the criminality of the origin and later treatment of the Burge predatory loan.

Cohen, the enforcer, remains at the CBA; indeed, he is its Deputy CEO. While foreclosed CBA and Bankwest borrowers have lost everything, not least the family home, Cohen, rewarded well for services rendered, gets to move upmarket in the real estate domain.

Meanwhile, during the (Hayne) Financial Services Royal Commission, the Burge file was handed to one Catherine Fitzpatrick. Fitzpatrick called Burge on 23 November 2018 (I’ve heard it) and asked Burge what figure she had in mind regarding compensation (implying an intent to settle), so that the matter could be brought to closure.

A little over two months later, the tune had changed. Burge receives correspondence from Fitzpatrick on 5 February 2019 claiming that the FOS determination of 13 August 2014 had already cemented the matter. Burge remains indebted to the CBA, end of story.

Curiously, Fitzpatrick also repeated the central anomaly in the FOS determination with acknowledging its implications for the bank:

‘4.1 The Bank once more acknowledges the maladministration in lending with respect to both the BBL and the IHL. It accepts that the loans were inappropriate and should not have been made. This was determined by FOS on 13 August 2014 and that Determination is, of course binding on the Bank.’

FOS broke its own rules, as above. The CBA is thus content to hide behind FOS’ broken rules, thus avoiding any substantive culpability. It is more than curious that Fitzpatrick’s letter arrives on the day after the Hayne Royal Commission delivered its final report on 4 February 2019.

The CBA knew that it was off scot-free. Fitzpatrick herself subsequently left the CBA, where she was ‘in various positions leading the community and customer vulnerability’, for Westpac in January 2021 to become Westpac’s ‘Director, Customer Vulnerability and Financial Resilience’. I know all about Westpac’s internal dispute resolution apparatus and it, like the CBA’s, is high farce.

Regarding Dr Robert Cooke, Cooke received a letter from Jacqueline Schrader, General Counsel Group Services Legal, on 18 September 2020, telling Cooke to buzz off. Schrader was probably also in nappies when the crime against Cooke was perpetrated. Bank victim consultant John Salmon wrote to Schrader on 25 March 2021 (cc. to CBA CEO Matt Comyn), highlighting that, given the claims in her letter, she was effectively clueless.

Salmon noted to Schrader:

‘Now impecunious, having been forced into early retirement, this broken man is haunted daily by the incompetent and unprofessional financial advice given at the time which ultimately ruined his brilliant career and resulted in the disintegration of his family life because of the stress it placed on all parties.’

Cooke died in August 2021, a broken man, fighting the CBA to the end.

The CBA has institutionalised criminal practices. It has consciously made invisible the victims of this criminality. One can trust the CBA... not to do the right thing.

Now here’s the rub. At Catherine Livingstone’s farewell, who should be present but ASIC Chairman Joe Longo and outgoing APRA Chairman Wayne Byres. What? Do they not understand the symbolism of their presence? ASIC, APRA and AFCA are the institutional three wise monkeys. It’s a closed shop.

Meanwhile, when the CBA is not screwing borrowers (overstretched home mortgagors will be next on the chopping block), it’s closing branches (with the other banks) at a furious pace. This complements an earlier round in the 1990s (a prelude to full privatisation) when the CBA under Murray retrenched 15,000 staff and closed 600 branches and 250 branches of the just acquired Colonial Bank. In my neighbourhood of Inner Western Sydney, CBA has recently closed its Summer Hill, Glebe and Annandale branches, taking out the ATMs as well.

The bank that was created to serve the public interest (hence its name) is now a travesty of the “People’s Bank” established in 1911. An ethical CBA is an oxymoron.

Dr Evan Jones is a retired political economist. 

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