24 September 2016
Sydney, 23 September 2016: The Australian Bankers’ Association has provided its submission to Mr Stephen Sedgwick’s independent review of commissions and payments in retail banking, confirming the industry’s commitment to meet changing expectations.
“Banks are providing detailed information to Mr Sedgwick to assist him conduct his independent review,” Australian Bankers’ Association Chief Executive Steven Münchenberg said.
“Banks have heard that the community wants change and we are responding. We want customers to be confident our staff are not paid in ways that encourage them to put their own interests, and the bank’s, ahead of what is best for the customer,” he said.
“The independent findings will be important for banks to build on the changes already made in recent years to how they pay staff, such as rewarding employees for providing good customer service and for behaving ethically.”
The ABA submission sets out the industry’s reasons for establishing the independent review and confirms our commitment to remove or change any product sales commissions and other product based payments identified which could misalign with customer interests.
Mr Münchenberg said the Terms of Reference made sure the findings of the review would be evidence-based, with clear recommendations on action that should be taken.
“We want to hear from the reviewer whether there are payments which should be removed or changed, and if there are, what options are available for the industry to take collective action,” he said.
“There are complex legal constraints on what the industry can say and do. Banks cannot share commercially sensitive and confidential information, nor agree to take collective action on how they pay staff because they are competitors and must act within the law.”
The ABA submission includes legal advice that a joint initiative to address potentially conflicted pay structures would likely run foul of the Competition and Consumer Act 2010.
“We therefore require authorisation from the Australian Competition and Consumer Commission, or similar regulatory approval, if the industry wishes to work together to agree on and implement changes to pay which build on the Future of Financial Advice reforms,” Mr Münchenberg said.
A copy of the ABA submission is available here.
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