As opposition calls for a royal commission into the banking sector mount, the Australian Bankers' Association (ABA) has hired corporate law firm Gilbert+Tobin to review the industry's remuneration practices.
Announcing six measures aimed at "strengthening community trust" in banks yesterday, ABA chief executive Steven Münchenberg pledged to either "remove or change" any industry pay incentives that are found to "deliver poor customer outcomes".
The independent review will be led by Gina Cass-Gottlieb of Gilbert+Tobin. Ms Cass-Gottlieb will oversee the governance arrangements for the remuneration plan, the review process, public reporting, and the selection of independent experts to implement the plan, according to the ABA.
Mr Münchenberg said the implementation of any industry-wide changes to remuneration practices would require the regulatory approval of the Australian Competition and Consumer Commission (ACCC).
"We have spoken to the ACCC about doing that. Given that these changes are designed to increase and improve customer outcomes, we are confident that we’ll get that, but ultimately it’s a matter for the ACCC," he said.
The mooted changes to remuneration will be accompanied by changes to complaints handling processes, new whistleblower protections, the creation of a register of bank employees to remove 'bad apples', a review of the Banking Code of Practice and support for ASIC's new 'user pays' funding model.
Mr Münchenberg said that while the ABA does not believe a royal commission into the sector is necessary, the changes will go ahead whether or not a royal commission is held.
"We have been working on this for some time; this is not something that you cobble together overnight," he said.
"[The ABA] has been very mindful of the growing concern in the community in light of a number of revelations about the industry – and in light of a number of things the banks have found and reported to the regulator.
"We’re committed to doing this. We’ll do this whether there’s a royal commission or not. These are important changes that need to take place. If we have an RC at the same time then so be it," Mr Münchenberg said.
[Related: Banks slam call for royal commission]