Australia's banks will immediately establish an independent review of product sales commissions and product-based payments, with a view to removing or changing them where they could result in poor customer outcomes, said the Australian Bankers' Association (ABA) in a statement. The banks will begin to implement comprehensive new measures to protect consumer interests, increase transparency and accountability and build trust and confidence in banks.
“This package aims to address consumer concerns about remuneration, the protection of whistleblowers, the handling of customer complaints and dealing with poor conduct,” ABA Chief Executive Steven Munchenberg said.
“Banks will also improve their protections for whistleblowers to ensure there is more support for employees who speak out against poor conduct.
The banking sector has been hit by a spate of scandals, one of which involves the insurance arm of the country's biggest bank, the Commonwealth Bank of Australia. The insurer, Comminsure, inappropriately denied or delayed payments to several terminally ill patients of total and permanent disability payouts.
Mr Munchenberg said: “This plan delivers immediate action to make it easier for customers to do business with banks, including when things go wrong. For example, improved complaints handling and better access to external dispute resolution, as well as providing compensation to customers when needed."
The plan, parts of which are subject to regulatory approval or legislative reform, will be overseen by an independent expert.
“We recognise the importance of having an impartial third party to oversee this process,” Mr Munchenberg said. The banking industry has appointed a law firm to lead the work on establishing the governance arrangements around the implementation of the plan, the review process, public reporting, and the selection of an independent expert to oversee implementation of this initiative.
“The banks also support the Federal Government’s review of the Financial Ombudsman Service, who is the independent umpire for customer complaints, to ensure it has the power and scope required to deal with a variety of issues that currently fall outside its thresholds,” he said.
The banking industry said that it would also:
-remove individuals from the industry for poor conduct
-strengthen its commitment to customers in the Code of Banking Practice
-support the Australian Securities & Investments Commission as a strong regulator.
The review was announced after some of the country's most senior bankers met Prime Minister Malcolm Turnbull yesterday morning to discuss the industry's response to public concerns over industry misconduct, and the government's changes to ASIC.