Cash Converters slams 'reputational risk' of our big banks

BOQ AFR PHOTOGRAPH BY GLENN HUNT Thursday 18th of October 2012.
COMPANIES-  Bank of Queensland CEO Stuart Grimshaw speaking at the bank's annual results.
BOQ AFR PHOTOGRAPH BY GLENN HUNT Thursday 18th of October 2012. COMPANIES- Bank of Queensland CEO Stuart Grimshaw speaking at the bank's annual results.
BOQ AFR PHOTOGRAPH BY GLENN HUNT Thursday 18th of October 2012.
COMPANIES-  Bank of Queensland CEO Stuart Grimshaw speaking at the bank's annual results.

BOQ AFR PHOTOGRAPH BY GLENN HUNT Thursday 18th of October 2012. COMPANIES- Bank of Queensland CEO Stuart Grimshaw speaking at the bank's annual results.

You know the big banks are on the nose when a disgraced pay day lender like Cash Converters feels it has the moral authority to castigate the oligopoly over its recent behaviour.

Stuart Grimshaw, the chairman of the Perth-based pawn shop operator, took great delight in slamming the big banks in the company's annual report which was released on Friday.

The main point of contention for Grimshaw is that the banks refuse to deal with Cash Converters due to "reputational risk".

That would really stick in the craw of Grimshaw who resigned as Bank of Queensland's chief executive in 2014 to join Texan pawn shop operator, EZCorp, which is Cash Converter's largest shareholder.

Needless to say that in the wake of the Austrac allegations that Ian Narev's Commonwealth Bank was a one-stop shop for the criminal underworld's money laundering, Grimshaw thinks the banks' stand is a bit rich.

"Ironically, when reviewing the performance of the banks over the past few years, what is evident is a focus on driving profitability at the expense of sound reputational risk management," said Grimshaw, citing CommBank's scandals across life insurance, financial advice and money laundering, as well as ASIC's impending bank bill swap rate (BBSW) Federal Court case against the other members of the big four.

"The breadth of these issues is breathtaking and continues to drive consumer apathy towards these large institutions. If we were to use the same underlying reasoning as the banks in refusing to provide services to Cash Converters, then surely all capital markets should be closed to these banks, given the significant reputational risks they now represent."

And to think this is the guy who fronted Bank of Queensland's "It's possible to love a bank" campaign.

If the big banks were tempted to lower themselves to addressing the dressing down from Cash Converters, they might be tempted to point out the pawn shop is probably well versed in the issue of driving profitability at the expense of sound reputational risk management.

Cash Converters has had some of its unsavoury business practices highlighted on ABC's Four Corners, subject to two separate class actions and the corporate watchdog, ASIC. The practices occurred before Grimshaw's time at the helm but he is still dealing with the fall out with ASIC forcing the pay day lender to refund $11 million to customers late last year.

It seems Cash Converters had failed to check if borrowers could actually afford to repay the loans.

"ASIC is seeking to protect financially vulnerable consumers, many of whom are recipients of welfare payments, from falling victim to unsuitable pay day loans," ASIC deputy chairman Peter Kell said at the time.

Former Kiwi Olympian Grimshaw might not agree.

"We are able to provide comfort to our customers in a very short time as opposed to the banks who take a long time and inevitably say no."

At least he showed the banks some gratitude on this point.

"A number of our customers remain unable to obtain credit from banks - which has been a benefit to us and we thank the banks for this."

Summer clearance

The year of living dangerously is not over yet for board room dangerman, Gary Hounsell.

It all started innocently enough in February when Margaret Jackson stepped down as chairwoman of Spotless Group with immediate effect, catapulting Hounsell into the hot seat at the cleaning contractor.

Two days later, a class action was lobbed at Spotless.

A takeover bid from Downer EDI followed just four weeks later. Hounsell was out the door in August with a two-finger salute to Grant Fenn's bovver boys from Downer after an acrimonious battle for control.

Flushed with a taste for danger, Hounsell then signed up for the Myer chairman's gig - and will get the top job a little sooner than expected after billionaire Solomon Lew helped usher Paul McClintock out the door after next month's AGM.

The problem is, Lew wants Hounsell to join McClintock on the sidelines.

Hounsell's lack of retail experience should not be the only issue counting against him.

Taking on a basket case like Myer should be a full-time job, and Hounsell's dance card is pretty full at the moment.

On top of his impending chairman's role at Myer, Hounsell is also chairman of travel group, Helloworld, a director of Dulux Group, Treasury Wine Estate and Commonwealth Superannuation Corporation Limited.

Sol wants to make sure Hounsell will have plenty of time to devote to his non-retail duties.

Follow CBD on Twitter. Got a tip? ckruger@fairfaxmedia.com.au

This story Cash Converters slams 'reputational risk' of our big banks first appeared on The Sydney Morning Herald.