Westpac's relationship with ASIC may also be affected by several high-profile court cases between the two in recent years,including over responsible lending,allegations it rigged the bank bill swap rate,and financial advice.
"We've had a number of significant legal cases. We don't like to go to litigation if we can avoid it,but we have had a couple of occasions where we couldn't agree and ended up in litigation. And that inevitably,I imagine,colours things,"Mr Hartzer said.
He said the bank had also taken steps to deal with"questions"over how it notified ASIC about potential breaches of its financial services licence.
Mr Hodge asked if the culture of Australia's second-largest bank might also be a factor.
"When you think about the difficulties that occurred with credit card limit increase offers back in 2012 through to 2014,and these breach reporting issues and the history of litigation you have with ASIC,do you draw any conclusions about culture within Westpac from that?"Mr Hodge asked.
"I don't,"Mr Hartzer replied.
Mr Hodge also produced a memo from the Australian Prudential Regulation Authority (APRA) from a meeting attended by Mr Hartzer and APRA chairman Wayne Byres in May this year.
“Brian thinks unfair everyone has to go through CBA exercise when nothing has gone wrong to CBA's scale,” the memo says.
This was a reference to Mr Hartzer not wanting to do a complete governance and culture review as the Commonwealth Bank did following a string of scandals.
Mr Hartzer said he did not recollect"saying it quite like that"and he did not oppose doing a self-assessment,but the debate was the scale of the self-assessment.
"And my point was simply,'We haven't had that. We have issues. We're dealing with them',"Mr Hartzer said.
One of the key problems Westpac has faced is a scandal known as"fees for no service"in financial advice,where it is refunding millions of dollars to customers who paid for services that weren't provided.
Mr Hartzer signalled the bank's commitment to some sort of advice business,by saying to walk away entirely would be to"abandon"customers. But he added that affordable,high-quality advice could"potentially"be provided by robo-advisers in future.
Mr Hartzer was also quizzed about Westpac's practice of linking up to 30 per cent of variable pay for frontline staff to financial measures. He defended these payments on the basis they could encourage customer retention,as well as new sales.
“It's also about growing the number of customers that we have,the ... managing the deposit relationships,as well as the balance. So it's balances,it's retention. It's not just selling widgets,” Mr Hartzer said.
The hearing continues.