Given the magnitude of operational inefficiencies showcased by the Haynes Royal Commission, the fight against the banking companies is likely to prevail in the courts of our country.
Class actions and proceedings might be here to stay for a while, and continuous noises should be expected as the banking sector emphasises to sail the jittery tides effectively.
Meanwhile, the scale of cases, compensation costs, settlement costs and the time invested in defending such claims are likely to result in some additional costs for companies that are accused of various allegations, which have been acting as fodder for law firms engaged in class action practices.
It appears that law firms have been actively chasing plaintiffs or maybe shareholders need compensation for the damage caused by inefficiencies highlighted by Haynes Royal Commission.
Some of these law firms include Slater & Gordan, Phi Finney McDonald, Maurice Blackburn, Shine Lawyers etc. Also, the public bodies in the country have been engaged in proceedings against the big four banks, and these outfits include CDPP, AUSTRAC, ASIC etc.
In media, the stories of companies being slapped with class actions suits have been gaining momentum, especially in the banking and financial services industry but not limited to retailers, cruise operators etc.
Commonwealth Bank (ASX:CBA) reports the latest suit
In an exchange release on 23 January 2020, Commonwealth Bank acknowledged that Shine Lawyers had filed a case against a subsidiary of CBA – Colonial First State Investments Limited (CFSIL).
It was recorded that trials were bought against CMLA (The Colonial Mutual Life Assurance Society Limited)– a life insurance entity of CommInsure Life. And, CMLA became a non-consolidated entity on 1 November 2019.
It has been alleged that Colonial First State’s intentions were not in the best interests of the members when sourcing insurance products from CMLA. CBA and its subsidiaries are reviewing the claim.
In October 2019, the bank reported that a class action proceeding was filed against CFSIL by Slater & Gordan in the Federal Court of Australia. The law firm was pressing charges on certain fees that were levied to members of FirstChoice Superannuation Trust of CFSIL.
During the same month, the bank also notified the second-class action proceedings against CFSIL and a former executive director of CFSIL by Maurice Blackburn. This proceeding was related to the transfer of default balance in FirstChoice Employer Super held by its members that were transferred to MySuper product.
In October 2019, the Commonwealth Director of Public Prosecutions (CDPP) served the bank with proceedings in relation to the violation of anti-hawking provisions under the Corporation Act.
CBA noted that the said practice was ceased in 2014, and the matters were reported to ASIC as a part of the investigation by ASIC. Later in November 2019, the bank reported that it pleaded guilty in the CDPP proceeding against CommInsure.
On 23 January 2020, CBA last traded at $84.52, up by 0.083 per cent from the previous close.
Westpac Banking (ASX:WBC) names turnaround specialist as Chairman
Westpac has reported that Mr John McFarlane has been appointed as the Chairman-Elect of the bank with effect from 2 April 2020. He would be starting his role as a Non-Executive Director in February, subject to regulatory approvals.
Mr McFarlane is a renowned banking veteran in Australia and New Zealand as well as globally. He brings in the experience of over 44 years in the banking and financial services industry.
In banking and financial services industry, Mr McFarlane has worked in retail banking, wholesale banking, markets, life and general insurance, and has significant Board experience as well.
He has been in the Boards of the world’s leading financial services organisations for over 27 years, and these roles included chief executive, non-executive director, non-executive chairman.
Mr McFarlane was the Chairman of Barclays, which was rescued in the aftermath of the global financial crisis. In his tenure, Barclays was streamlined, repositioned and returned to profitability.
Prior to Barclays, he delivered the turnaround program at Aviva – a UK based insurance company. Domestically, he had a brief stint of ten years as the Chief Executive of Australia & New Zealand Banking Group (ASX:ANZ).
Westpac believes that Mr McFarlane’s experience, customer and employee focus would deliver better outcomes in implementing its strategy and response plan to remediate inefficiencies highlighted by AUSTRAC.
It was noted that, while taking on internal and external search processes, he would also be responsible for the selection of a permanent CEO, till then he would be working with interim CEO.
Mr McFarlane remarked that he did not have intentions to take up a major leadership role, but the recent challenges in Australian banking industry convinced him to take up the role at Westpac in a bid to reclaim the brand’s position.
He noted that the internal and external challenges faced by the bank are not new to him, and he would work with the team to implement the change. However, he is also ‘battle-hardened’ for the uncertain events that the banking industry could present.
Initially, he intends to emphasise on current issues faced by the bank with necessary repositioning to deliver long-term success, and the bank’s core customer franchises present opportunities.
Also, he said that the appointment of a world-class CEO could take time, and he would be working with the team to execute necessary implementations, and people could expect positive changes.
On 23 January 2020, WBC last traded at $25.08, down by 0.24 per cent from the previous close.
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