Industry Super Australia (ISA) has submitted a recommendation to the ABA Sedgwick Review, asking that banks cease paying all commissions and incentives by 2020.
In its submission to the ABA review, ISA said it is “increasingly concerned that the lack of community trust and confidence in the banks could reduce public confidence in our compulsory super system”.
“We are concerned that the [ABA] review excludes from its scope the very areas where there have been ongoing scandals that have resulted in significant detriment for consumers," ISA said.
“These areas include life insurance commissions, conflicted remuneration where permitted by FOFA, the practice of banks bundling super with business banking products, balanced scorecard arrangements and cross-selling superannuation products to consumers."
ISA chief executive David Whiteley said, “To restore public confidence, by 2020 the banking system should be free of all conflicted remuneration.
“What is required is a comprehensive ban on all incentives and commissions paid to all employees by all banks, including cashiers, business bankers and financial advisers.”
ISA referenced the 2014 Final Report of the Financial System Inquiry, citing that collapses involving poor advice, information imbalances and exploitation of consumer behavioural biases have affected more than 80,000 consumers, with losses totalling more than $5 billion.
“A decision by the banks to cease paying all incentives by 1 Jan 2020, including all grandfathered commissions, is the circuit breaker needed to send a clear signal to the Australian community, parliament and regulators that the banks will stop cross-selling and up-selling superannuation and other products to consumers when it is not in their best interests,” Mr Whiteley said.
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