An independent review of how banks are remunerating staff and third parties has been launched and is expected to build on the FOFA reforms and focus on potential conflicts, the Australian Bankers’ Association (ABA) has said.
The ABA said in a statement yesterday that it had appointed Stephen Sedgwick, a former Australian Public Service Commissioner, to conduct the review of product sales commissions and product-based payments that could lead to poor customer outcomes.
The review will cover bank 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, the statement said.
Customer-facing employees, contractors and third parties will be considered as well as managers and supervisors. Payments made by banks to non-bank sales channels and intermediaries will also be reviewed, the ABA said.
“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.”
Mr Münchenberg added that this review will build on the FOFA reforms, which “have brought about significant changes to remuneration structures across the financial services industry”.
The public is invited to make submissions on the matters in the terms of reference.
The ABA announced in April that a review of bank remuneration structures would be conducted as part of a raft of new consumer protection measures.
ifa reported last week that CBA had responded to a union’s claims that the bank’s pay model was pressuring staff to push products.
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