Australia’s banking industry is committed to removing payments that may cause staff to act in a manner that is not in the best interests of consumers according to one industry body.
Established by the Australian Bankers’ Association (ABA) former Australian Public Service Commissioner Stephen Sedgwick is currently chairing an independent review of commissions and payments in retail banking.
The ABA has recently provided the review with its own submission, which it claims shows the industry is ready to take any steps that may be considered necessary prove customer interests are at the forefront.
“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,” ABA chief executive Steven Münchenberg said.
“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,” Münchenberg said.
Westpac recently announced that from October all product related incentives across all 2,000 tellers in its branch network will be removed and replaced with an incentive system based on customer feedback
But while Westpac believes it is taking the right steps to rebuild trust, Münchenberg said those calling on the industry to enact wholesale changes need to be mindful of legislative issues.
“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,” he said.
“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.”
The ABA submission claims legal advice shows a joint effort by banks to address potentially conflicted pay structures would likely be illegal under the Competition and Consumer Act 2010.
Münchenberg also said those legal issues also prevented the ABA from including information about the specifics of commissions and other incentives offered by banks in its submission, however he said the banks themselves are providing “detailed information.”