17 April 2018
Today’s release of the final report of independent governance expert, Mr Ian McPhee AO PSM, shows that Australia’s banks have made significant progress on the Better Banking Reform Program, including finalising many of its measures.
The program, which began in April 2016, outlined a range of changes and initiatives to achieve three outcomes – better products, better service and better culture. Banks have been implementing these reforms over the last two years, with Mr McPhee independently monitoring their program as part of the industry’s commitment to accountability and transparency.
A major part of this reform has revolved around changes to the way banks pay their staff, as outlined in the Sedgwick Review completed in 2017. These changes include removing direct sales incentives, abolishing mortgage broker commissions directly linked to loan size and introducing balanced scorecards in each bank. The review set a deadline for these changes to be completed by 2020 however banks are already well underway in implementing these reforms.
Australian Banking Association CEO Anna Bligh thanked Mr McPhee for his expert oversight over the last two years providing independent governance advice and monitoring for the ambitious industry reform program.
“Ian McPhee and Price Waterhouse Coopers have done a rigorous job over the last two years in their independent monitoring of the implementation of the Better Banking Reform Program,” Ms Bligh said.
“The industry has set a cracking pace on some of the toughest reforms in over a decade, as detailed in Mr McPhee’s final report, however there is still further work to be done to bed these down.
“Banks have made a large investment in reform to better meet community expectations, such as changing the way bank staff are paid and improving customer protections under the new Banking Code.
“Banks are on track to meet the 2020 deadline set by the Sedgwick Review to reform the way they pay their staff including abolishing direct sales incentives and scrapping mortgage broker commissions directly linked to loan size.
“While this is the final report by Ian McPhee the industry has taken his advice and will be putting in place further arrangements for public reporting.
“Banks will be making further regular public reports on the success of the program and their ongoing implementation of the Sedgwick recommendations and the new Banking Code,” she said.
Key initiatives already implemented include:
- Customer advocates within banks to ensure complaints are resolved quickly and fairly
- Improving protections and awareness of processes for whistleblowers, including best practice industry guidelines
- Stamping out poor conduct in the industry by ensuring staff with records of poor behaviour do not simply move around the industry.
Contact: Rory Grant 0475 741 007
Mr McPhee’s report is available here.
“Australian banks are certainly better equipped now than they were in the GFC. They’ve got 2 to 2.5 times the capital reserves put aside for a rainy day than they had in the GFC”
“The Australian Banking Association (ABA) welcomes the agreement reached today on the proposed safeguard mechanism reforms, given it paves the way for the passing of a critical piece of legislation for Australia.
“This is about engaging with the entire banking ecosystem in order to ensure the accessibility of the sector’s services are best serving our diverse community now, and into the future.”