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“Banks recognise that how they pay staff is an important factor in determining community trust and confidence in banks,” ABA Chief Executive Steven Münchenberg said.
“We want to ensure that across the banking industry when people are rewarded for selling products and services they are putting customers’ interests first,” he said.
Former Australian Public Service Commissioner, Mr Stephen Sedgwick AO, has been appointed to conduct an independent review of product sales commissions and product based payments that could lead to poor customer outcomes.
The review will include remuneration for selling and providing advice on products such as transaction accounts, general insurance products, consumer credit insurance, mortgages, personal loans, credit cards and small business loans. This covers customer facing employees, contractors, and third parties as well as non-customer facing roles, such as the managers and supervisors of those staff.
Payments made by banks to non-bank sales channels or intermediaries will also be considered as part of the review. The review will focus on retail and small business banking, not wholesale or institutional banking.
“This review builds on the Future of Financial Advice reforms which have brought about significant changes to remuneration structures across the financial services industry,” Mr Münchenberg said.
Mr Sedgwick will be supported by a competition and legal expert – Gina Cass-Gottlieb from Gilbert + Tobin Lawyers – and a remuneration expert – David Heazlett from Mercer, as well as a stakeholder advisory panel which includes: Gerard Brody – Chief Executive of Consumer Action Law Centre, Geoff Derrick – National Assistant Secretary at the Finance Sector Union, Sarah Saunders – Chief Advocate at National Seniors and Dr Deen Sanders – Chief Executive of the Professional Standards Authority.
Mr Sedgwick will consult with banks, consumer and small business organisations, the Finance Sector Union and employees of banks, regulators and other stakeholders.
Mr Sedgwick will also be asked to provide observations and insights from the review to assist banks ensure they have overarching principles on remuneration and incentives to support good customer outcomes and sound banking practices, the scope of which is broader than retail banking.
The public is invited to make submissions on any of the matters in the Terms of Reference. Submissions can be sent to firstname.lastname@example.org and are requested by 9 September 2016.
The Terms of Reference of the review and a biography of Mr Sedgwick are available at betterbanking.net.au.
This review is part of a package of initiatives announced by the industry in April this year to lift standards and be more accountable. More information is available at betterbanking.net.au.
Contact: Stephanie Arena 0477 470 677 or Nic Frankham 0435 963 913