Just before the Millennium ticked over I was working in a strategy role in the banking sector, responsible for measuring and monitoring sales activity across an extensive branch network. It was a time of massive change, as the emerging discount mortgage lenders washed through the money market like a tsunami. Or perhaps like a dose of Epsom salts.
Until that time, the big banks had a stranglehold on home lending. We could essentially charge what we wanted on mortgages, which was (in retrospect) quite a lot.
There were plenty of good reasons for that: Australia had just emerged from the recession we had to have, and banks’ loan books were still recovering from that. The branch network was big and expensive to run, as were the transactional products most Australians used to manage their money, and the lending margins provided some buffer to fund them. And there was the ever-present pressure to maximise shareholder returns (some things never change).
Of course, all of this meant nothing to the average customer.
Against this backdrop, the first wave of discounters entered the mortgage market offering the one thing that mattered most to our customers: cheaper money. Much cheaper in fact than we had ever offered.
My bank (like many others) felt the very real threat of this market disruption that (we now know) would change the face of banking forever. Mortgage discounters like Aussie Home Loans and RAMS brought with them a whole new operating model, with a lower cost base they happily passed on to customers in the form of lower interest rates.
When you’re in the business of lending money and the cost of funds doesn’t change, but you’re faced with trimming 100 or more basis points from the price you can charge, it’s a big problem. Partly because of the very significant fixed costs in the banking sector. And partly because it’s a big admission of just how much fat there was to begin with.
Our CEO said in a TV interview this is all about “just a handful” of members who had only recently spoken out in dissatisfaction. Well that could be a result of numbers being firmly locked away from members until legal force was used to demand disclosure; when the vault was opened we’re pretty peeved with what we found. Or it could be an alternate fact, given many members have shared with me details of meetings and feedback going as far back as four years.
They tell us that the results speak for themselves, and the organisation has never been more successful. By which metric? The decline in member growth? The increase in surpluses that are held in war chests rather than being distributed to members? And as to what the membership really looks like, we wouldn’t know because the current leadership shut down member reporting by category. The truth is members have no clue exactly how many accredited CPAs even exist anymore.
They keep raving about the world class service members receive, and the investment they’ve made in delivering it. Even when the course registration system failed this week, the Find A CPA service on the website was offline for three months and the last annual report shows member service at a very mediocre score of 6 out of 10.
They tell us the organisation has never been stronger or more influential. Really? Well why is it then that the NSW Government has threatened to remove CPAs from the professional limited liability scheme that our members in public practice rely upon? There are some 7,000 CPAs in public practice who face the very real prospect of having to shut down their businesses if our “leadership” can’t get this sorted out in the next couple of months.
They’ve invested in a side-business that has lost so much money – over $12million to date – that even at the most optimistic projections one fellow CPA says it will take until 2024 to break even (and believe me, the analysis on this is robust).
And in the past fortnight, seven of the twelve board members have resigned rather than succumb to the wishes of members. Yes, they were happy to walk away rather than admit they were wrong about the strategy that promotes our CEO above the organisation brand. Happy to walk away rather than band together as a majority to enforce change. This lack of moral fortitude is hardly befitting of a profession.
And finally, last Friday the newly appointed Chair of CPA Australia announced an independent review had begun “to conduct a thorough review of all claims made in relation to CPA Australia.” Not a review of board governance practices as requested by the members. Not a review of spending. Not a benchmarking of salaries or a review of the marketing strategy and disastrous CPA Advice business. No, it’s a review of the claims of that handful of wretched trouble makers including this member (and by the way, the number of dissenting members now numbers over 1,400).
And to rub salt into the wound, both panel leaders of the review are published supporters of CPA Australia CEO Alex Malley, having contributed to the foreword of Mr Malley’s book, The Naked CEO. A quick straw poll of members over the past 48 hours has gathered 215 responses, 92.5% of whom say the panel members fail to pass the standards of independence expected of the accounting profession. (BTW I’m happy to distribute freeform comments to any members who are interested).
Like the Banks in the 90’s, CPA’s leadership has treated its members with utter contempt. And like the Banks, they’re about to feel a big pinch on the bottom line as member subscriptions fall due.
Only heaven knows how many millions of dollars have been expended by CPA on lawyers and marketing messages aimed at convincing members that they are wrong and our leadership are right.
You know what matters more than being right? Being believable. And that’s something this professional body has forgotten how to be.
Yours in contemplation,