The chief executive of Australia’s largest bank has hit out at regulators, saying they have shown an “undue level of concern” with the potential bonuses paid to some of its bankers after it raised a
Australia’s top banker defends lifting bonus caps
CBA lifted a bonus cap for mortgage managers that had been adopted after a government inquiry into the financial services sector in 2017. Photo / 123RF
“It simply cannot be that there is an undue level of concern over what we are talking about — a few hundred lenders — compared to the 20,000 mortgage brokers that don’t have any of the controls in this regard,” he said.
The voluntary caps had been agreed as part of an overhaul of the banking industry, called the Sedgwick review. It had found that bankers had been motivated by financial incentives rather than by customer satisfaction, which had led to poor behaviour across the financial services sector.
The ASIC said in a statement that it would monitor the behaviour of banks that had raised bonuses for any signs of “incentive selling”. “Those banks should be on notice ASIC will not hesitate to act on any misconduct identified,” the regulator said.
Australia’s mortgage market, the lifeblood of the country’s banking sector, has become more competitive in recent years with Macquarie — a challenger in its home market — winning market share from established lenders. More bankers have also opted to set up their own mortgage brokerages in which bonus caps do not apply.
Elizabeth Sheedy, an academic at Macquarie University’s applied finance department, said the potential increase in bonuses for the bank’s mortgage staff was not of huge concern as long as those payments were deferred and subject to clawback.
She added that Comyn was right to highlight the growing power of the independent mortgage broker market, amid concerns that many younger home buyers were not being made aware of the huge financial risk they were undertaking.
“I do worry it is a pretty unregulated sector,” she said.
Comyn, who has led the A$233 billion ($252.8b) market cap bank since 2018, was paid more than A$10 million last year due to the vesting of a long-term incentive plan and CBA’s record net profit of more than A$10b in 2023.
He also hit out at a growing anti-business sentiment in Australian politics which he said suggested that corporate profits had been “unjustly extracted from consumers”.
“This fact-free rhetoric...it is very damaging. It is eroding trust in institutions, in all of our institutions, it is a real cause for concern,” he said, pointing to political accusations of price-gouging made against supermarkets and pressure on the banking sector to lower the cost of digital transactions.
Comyn described a proposal by the Greens this week to introduce a “supertax” on the profit of large companies including miners and banks as “insidious”.
Written by: Nic Fildes
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