When the scandal emerged inside the bank in 2013, a decision was taken not to take any punitive action against staff on the basis it was "somewhat commonplace". An email described the practice as "widespread" and "it would seem unfair to name a handful when more are involved". This was despite it being fraudulent and in breach of the Code of Banking Practice. Parents weren't told, schools weren't told and the board and the regulator weren't told until recently.

The Finance Sector Union issued a statement saying "this is about a sales culture at all costs. It is more evidence that the sales culture within banks is rotten."

CBA chief executive Matt Comyn, who was running the retail bank in 2013, when the misconduct was detected, said: "While this practice did not financially harm any of our customers, it was a breach of their trust. For that I'm deeply sorry. As CBA's new chief executive, my number one priority is to expedite changes that will prevent any behaviour that undermines our customers' trust in us – and to remove any CBA employee who knowingly acts against our customers' interests."

Chilling accusation

Between now and the end of the royal commission, the public will hear a lot more public apologies from financial institutions, including CBA, for poor behaviour.

"The pub test is whether the public will find the actions of the banks unreasonable, unethical or even unconscionable," Kate Carnell said. Louie Douvis

None more than the way banks have treated SMEs over the years. Ross Waraker, a marketing researcher specialising in brand, strategy and advertising, has been tireless in his quest to get to the bottom of what went on after a friend who owned a pub in Sydney, The Sandringham Hotel, became a victim of CBA's BankWest in 2012. The pub was put into receivership, despite never missing an interest payment.

Such allegations have dogged CBA since it took over Bankwest in October 2008 for $2.1 billion during the global financial crisis. In a 2012 senate inquiry into post-GFC banking, more than 150 submissions were received from Bankwest customers who relayed stories of how the bank had "engineered" defaults by getting the loan revalued to change the loan to value ratio.


Then in March 2014 the allegations flared up again when Alan Eggleston, who at the time was a Liberal senator, accused CBA of deliberately defaulting some of Bankwest's business to "claw back the acquisition price and prevent its funding costs from rising due to global banking rules".

He told parliament that information brought to his attention could conclude that "CBA had a predetermined outcome it needed to achieve, and it opportunistically capitalised on Bankwest's dire financial situation by manufacturing defaults on certain customers to engineer the result that it wanted".

CBA chief executive Matt Comyn apologised for the gaming of Dollarmites accounts by branch staff. Louis Douvis

"If it is true that the CBA got a price reduction exactly equal to the gross value of impaired loans in 2008 then this means CBA paid zero cents in the dollar for those impaired loans," Eggleston said.

It was a chilling accusation that CBA vigorously denied, as well as denying any misconduct. But the speculation lingered and it is something many hope the royal commission will investigate to clear up one way or the other.

In June 2015 a parliamentary inquiry reached conclusions handed down almost a year later that the banks might not have acted illegally when throwing small business customers to the wall, but they did behave unconscionably.

Time to slow down

Waraker, who has established White Collar Crime Reform, gave evidence to the parliamentary inquiry and referred to a submission by Hall Partners that he said "detailed a large number of victims that the CBA deliberately and systematically financially distressed and then constructively defaulted over 1000 performing Bankwest commercial loans to the value of at least $8.2 billion, following the acquisition of Bankwest by the CBA."


CBA denied the allegations and the committee never got to the bottom of it.

The committee concluded that CBA "consistently denied that there have been issues with their conduct and how it engaged with customers. The evidence of witnesses and submitters to this inquiry has strongly called into question the Commonwealth Bank's denial of unreasonable or unethical conduct."

Fast-forward to 2018 and Waraker has made a submission to the royal commission. He told the Financial Review he hoped the royal commission has enough time and resources to research and prepare adequate case studies, which fully expose the banks conduct in respect of these loans.

He also hoped that the bank would finally acknowledge the conduct and quickly agree to compensate victims.

Nationals Senator John Williams, who has sat on the various parliamentary hearings and helped a number of people and farmers who banks sold up – or would have been sold up without his intervention – said over the years there have been many cases were assets were sold at firesale prices, even if the customers hadn't missed an interest payment.

He said it made a mockery of section 420(a) of the Corporations Act, which requires receivers to seek the maximum value when selling assets. He hoped the royal commission would look into it.

He said some of the issues raised in the 2015 parliamentary inquiry were too much to get into given time constraints.

The royal commission is also working to a short timeline to investigate such a complex, opaque and powerful industry. It is tearing through institution after institution at lightning speed. It needs to slow down, extend the deadline and give more victims a voice to be heard.