An independent governance expert lists three "significant changes" that have most impact on the bank-customer relationship
Member banks of the ABA have made significant progress in their “Better Banking Reform Program” almost two years since the initiative began, according to a report released on Tuesday by independent governance expert Ian McPhee.
The program began in April 2016 and outlines a range of initiatives that aim to achieve "better products, better service, and better culture" in the banking industry. For the last two years, McPhee independently monitored the program as part of the industry’s commitment to accountability and transparency.
Part of the reform revolves around changes to the way banks remunerate brokers, as outlined by the independent review conducted by former Australian public service commissioner Stephen Sedgwick in 2017.
Of the different reforms, McPhee’s report listed three “significant changes” ABA member banks have implemented that will benefit consumers:
- The removal of, or amendment to, sales commissions and product based payments, to strengthen alignment to customer outcomes
- The substantial revision to the Code of Banking Practice to ensure it adequately covers the expected standards of good banking practice when dealing with individual and small business customers and, when applicable, their guarantors
- The establishment of dedicated customer advocates to give individual retail and small business customers a stronger voice, and facilitate the more efficient resolution of issues for these customers
ABA CEO Bligh is confident that the group’s member banks are on track to meet the deadline, especially in reforming the way they pay their staff – including abolishing direct sales incentives and scrapping mortgage broker commissions directly linked to loan size.
“Ian McPhee and Price Waterhouse Coopers have done a rigorous job over the last two years in their independent monitoring of the implementation of the Better Banking Reform Program,” Bligh said in a statement.
“While this is the final report by Ian McPhee…banks will be making further regular public reports on the success of the program and their ongoing implementation of the Sedgwick recommendations and the new Banking Code," she added.
