A former Australian public service commissioner has been appointed to conduct an independent review of how banks pay staff and mortgage brokers.
The Australian Bankers’ Association (ABA) announced that Stephen Sedgwick will lead the review of product sales commissions and product-based payments offered by banks that could lead to poor consumer outcomes.
The review will focus on remuneration for selling and providing advice on products including mortgages, small business loans, personal loans, transaction accounts, consumer credit insurance and general insurance products.
“This covers customer-facing employees, contractors and third parties, as well as non-customer facing roles such as the managers and supervisors of those staff,” The ABA said in a statement.
Payments made by banks to non-bank sales channels or intermediaries will also be considered as part of the review, according to the association. However, it will not focus on wholesale or institutional banking.
“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.
“This review builds on the Future of Financial Advice reforms which have brought about significant changes to remuneration structures across the financial services industry.
The ABA said Mr Sedgwick will consult with banks, consumer and small business organisations, the Finance Sector Union and employees of banks, regulators and other stakeholders.
Mr Sedgwick will also be asked to provide observations and insights from the review to assist banks on ensuring they have overarching principles on remuneration and incentives to support good customer outcomes and sound banking practices.
He will be supported by competition and legal expert Gina Cass-Gottlieb from Gilbert + Tobin Lawyers, as well as remuneration expert David Heazlett from Mercer.
A stakeholder advisory panel has also been established to support Mr Sedgwick, which includes Gerard Brody (CEO of Consumer Action Law Centre), Geoff Derrick (national assistant secretary at the Finance Sector Union), Sarah Saunders (chief advocate at National Seniors) and Deen Sanders (CEO of the Professional Standards Authority).