Australia’s corporate watchdog has defended a decision to hand the Commonwealth Bank an advance copy of a report into its handling of life insurance claims before it was made public.
The report, into the bank’s troubled life insurance business CommInsure, was looking into the bank’s practice of using outdated medical definitions to deny insurance claims, first exposed in a joint Four Corners/Fairfax Media investigation.
Emails between senior staff at ASIC, obtained under freedom-of-information laws, show the Commonwealth Bank repeatedly asked for a copy of the report and media release before it was released publicly.
“[Commonwealth Bank] reiterated to me their request for a copy of … public report the day before the release of the media release and public report by ASIC,” a senior analyst at ASIC wrote in an email on March 20 – three days before the report was made public.
An ASIC spokesman confirmed the report and media release were provided to the Commonwealth Bank within 24 hours of its public release, but said it was for only to “invite feedback on the factual accuracy”.
“We may, at our discretion, give advance notice of a public statement about a regulatory outcome to an interested party,” he said.
A Commonwealth Bank spokesman said fact-checking statements prior to their release was an important and routine part of the regulatory process.
“Our contact with ASIC on this occasion was entirely consistent with that routine engagement,” he said.
ASIC has been caught in the past relying on incorrect numbers provided by the Commonwealth Bank.
In May 2014, ASIC had to correct its testimony to a Senate inquiry after it misreported the number of Commonwealth Bank customers who had been offered compensation assistance as part of the bank’s financial planning scandal. At the time, ASIC said it had relied on figures provided by the Commonwealth Bank.
In the past, it has also been caught out sharing draft press releases with banks, as revealed in Freedom-of-Information documents obtained by News Corporation newspapers.
The emails revealed an often cosy relationship between banks and the regulator, with banks allowed input into the tone of press releases.
Andy Schmulow, a specialist in financial regulation at the University of Western Australia, dismissed ASIC’s claim that sharing media releases and reports was important for fact checking purposes.
“I question why it is that ASIC doesn’t have enough confidence in its factual findings, that it feels it necessary to double check – some may say obtain the blessing of – those about whom the facts are stated,” he said.
“If ASIC is only willing to enter to into discussions about factual issues, why is it that ASIC doesn’t have enough confidence in its understanding of the factual issues that it says, ‘we don’t need your comment on this because this is what we know’.”
He said sharing investigation reports was potentially more serious than just sharing media releases.
“These are not just opinions being expressed in the media, these are the outcomes of investigations,” he said.
“Can ASIC point to a section or part of the Corporations Act or the ASIC Act which compels them to do this – if they can’t point to anything in the legislation, then this is not a legal compulsion, it is a choice.”