Besieged Australian banks have unveiled a major review which they hope will win back customer trust as the industry faces the ongoing threat of a Labor-instigated royal commission.
The Australian Bankers’ Association has announced an independent review that will cover sales incentives and commissions, treatment of customers and protection of industry whistleblowers.
The banking lobby group said customers, shareholders and employees expect bank behaviour to meet high ethical standards and while satisfaction ratings were high, acknowledged that “there is more to do”.
The banks’ six point plan will include a review of sales commissions and product-based payments in financial advice, practices which have been a focus of complaints.
Commissions and payments will either be changed or removed “where they could lead to poor customer outcomes”.
The ABA said the changes would “strengthen the alignment of remuneration and incentives and customer outcomes”.
Banks have also pledged to improve treatment of customers and whistleblowers, amid growing public anger towards the industry which books billions in profit each year.
An independent customer advocate will be established in each bank to deal with complaints from retail and small business customers.
“This package aims to address consumer concerns about remuneration, the protection of whistleblowers, the handling of customer complaints and dealing with poor conduct,” ABA chief executive Steven Munchenberg said.
The new measures come a day after the federal government announced improved funding and powers for the corporate regulator, ASIC, including a new commissioner focused on prosecutions of misconduct in the financial sector.
Labor has pledged to hold a royal commission into the banking sector if it wins the federal election in June. Under the raft of measures, protection of whistleblowers will be standardised across the banking industry, including independent support, and protection against financial disadvantage.
The banks will also set up an industry register, which would extend existing identification of rogue advisers to any bank employees.
A review of the Code of Banking Practice will also be fast-tracked, and completed by the end of the year.
Westpac chief executive Brian Hartzer said the banks have given “a lot of thought to how conduct and culture be strengthened across the industry.”
The industry needed to make sure that product-based payments are “aligned to good customer outcomes” and where things go wrong, customers can have their complaints dealt with “efficiently and effectively”, Mr Hartzer said.
The banking industry has also voiced support for the government’s decision to introduce an industry funding model for ASIC and the four biggest banks, National Australia Bank, Westpac, Commonwealth Bank and ANZ Banking, have pledged not to pass on the ASIC costs to customers.
The industry has appointed lawyer Gina Cass-Gottlieb, from Gilbert and Tobin, to lead the work on the new measures and the selection of an independent expert to oversee implementation.