NAB “paranoid” about future banking scandals

by Miklos Bolza12 Oct 2016
Andrew Thorburn, chief executive of National Australia Bank, has said banks must remain “paranoid” in order to prevent the next wave of scandals.
During a talk at a Queensland University of Technology (QUT) Business Leaders Forum on Monday (10 October), Thorburn said it was difficult to ensure an ethical culture was in place.
“I think this is an extraordinarily difficult question because there for the grace of God go I,” he said.
"I think it's a very difficult challenge. I think you have to be paranoid about it all the time. You need to be monitoring customer feedback all the time. We're monitoring complaints a lot more."
Thorburn stressed the need for banks to do to protect whistleblowers and listen to what they are saying.
At NAB, the case of Dennis Gentilin – a whistleblower who uncovered the bank’s foreign exchange dealings in 2005 – was now used as a case study for training staff.
“Dennis remained with the bank for 10 years until his retirement,” Mr Thorburn said. “There is now a lot of independence in how whistleblowing is assessed. We have external people monitoring complaints and it is completely anonymous.”
While admitting that the recent scandals had been the result of whistleblowers and journalists, Thorburn also said that NAB’s internal processes had uncovered and rectified other matters.
“There are a number of cases where we had compensated customers by up to $15 million over the last five years for issues we had found internally and then addressed," he said.
However, he reiterated that the problems within NAB were not systemic because the negative behaviour that led to the scandals was not widespread.
“We have 1700 planners in our network and the 43 planners [found to have conflicts of interest] was over the course of three or four years, not in an individual year. And the practices were at the very minimum extremely sloppy and at worst downright fraudulent and they were being hidden from the bank.”
Although the bank had better systems for monitoring and compliance in place, he said that with hundreds of thousands of customers and complex systems, not everything was going to be picked up as fast as you would like it to be.