A new Code of Banking Practice is needed to improve trust and help fix issues relating to dodgy cross-selling and sales tactics, an independent review has found.
In the final report of the Independent Review of the Code of Banking Practice, reviewer and former ASIC executive Phil Khoury made recommendations for changes to the code that address bank mis-selling, high pressure sales techniques and the issue of consumers being sold insurance without their knowledge or consent.
In regard to bank cross-selling, Mr Khoury recommended that banks implement measures to ensure their staff are acting ethically when selling financial products.
"The Code should require signatory banks to ensure that their staff and authorised representatives, when promoting or selling financial services or products to Code customers, do this in a fair and ethical manner, without engaging in pressure sales techniques," Mr Khoury said.
In all sales, banks should also be able to evidence their customer’s explicit consent to an acquisition from or through them of a financial service or product, Mr Khoury’s report suggested.
“This should be drafted in such a way as to prohibit the use of an opt-out mechanism for an add-on sale and to make it clear that an ambiguous telephone sale script would not constitute evidence of explicit consent,” he said.
Yesterday, the Australian Bankers' Association chief executive Steven Münchenberg welcomed the final report.
“The industry will consider the 99 recommendations and work with stakeholders on the many complex, diverse and technical issues raised in the review…”
“We will provide a full response to the report in March and aim to release a new, enhanced Code by the end of 2017.”
“The independent review of the code is an important part of our program to fix problems, strengthen commitments to our customers and raise standards in banking,” Mr Münchenberg said.
“To hold us more to account, the industry is looking at how we can strengthen the governance of the code and will work with the Australian Securities and Investments Commission on approving the code.”
SUBSCRIBE TO THE IFA DAILY BULLETIN
24 Jan 2018FPA ‘never intended’ FPEC list for existing advisersBy Killian Plastow
24 Jan 2018ASIC investigation confirms in-house product biasBy Aleks Vickovich
24 Jan 2018CBA compensation payout hits $6.87m and risingBy Staff Reporter
23 Jan 2018Financial advice changing of guard ‘positive’By Staff Reporter
23 Jan 2018Royal commission, best interests duty and 2018 outlookBy Staff Reporter
23 Jan 2018Advisers challenged by geopolitical climate: reportBy Staff Reporter
- view all