The CEOs of ANZ Bank, Commonwealth Bank, National Australia Bank and Westpac are scheduled to appear before the House of Representatives Standing Committee on Economics in Canberra this week and next week to answer questions about the findings of the financial services royal commission.
Speaking of the hearings set to commence on Thursday, the chair of the economics committee, Tim Wilson MP, said: “These hearings will provide an important opportunity to scrutinise the bank CEOs following the shocking revelations of the royal commission.”
He also referenced Commissioner Kenneth Hayne’s interim report on the findings of the hearings, including the presence of conflicted incentives for bank staff. He said that these incentives had led to “appalling conduct contrary to law”.
“Yet, this misconduct has either gone unpunished, or the consequences have not met the seriousness of what has occurred, and must be addressed,” Mr Wilson added.
The Financial Sector Union (FSU) had said in its submission to the royal commission that banks are continuing to use scorecards and leaderboards to compare sales performance, despite the Sedgwick review recommending a reduction in sales targets and conflicted remuneration for frontline staff and junior management.
According to the union, key performance indicators have merely been rebranded as “behaviours” measures focused on sales and revenue and not on “ethical behaviour or the customer interest”, while scorecards and leaderboards are described as “informal visual aids” or “visual management tools”.
“A change in nomenclature does not change function. Such tools have no purpose beyond attempting to increase sales volumes,” the union said in its submission to the royal commission.
The FSU had also called for an examination of the impact of remuneration structures for CEOs and other senior executives on bank culture and operations, as they continue to be heavily focused on short-term and short-medium-term incentive payments.
The chair of the Australian Competition and Consumer Commission earlier this year also spoke about remuneration structures that reward bank employees for reaching or exceeding certain targets, acknowledging that despite them being a “legitimate and effective way of encouraging sales teams”, they could lead to poor customer outcomes if “proper safeguards are not established to limit how staff or agents achieve their sales targets”.
The chair of the economics committee said that the upcoming hearings will also be an “important opportunity to follow up on unresolved issues”, as well as “to consider how best to ensure appalling behaviour is not repeated without inhibiting the banks’ essential contribution to grease our economy”.
The CEOs of Commonwealth Bank and Westpac will appear before the economics committee on Thursday (11 October), while ANZ’s chief will take part on Friday (12 October). NAB’s CEO is scheduled to attend the hearing next week on Friday (19 October).