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Banks falling short on consumer initiatives

The Australian banks have put in a "mixed performance" when it comes to the implementation of new initiatives aimed at better protecting consumer interests, according to a new independent report.


Back in April 2016, the ABA announced a package of initiatives to be implemented by participating banks aimed at increasing the protection of consumer interests and the transparency of banks.

Ian McPhee was assigned as the independent governance expert to report on the implementation of the initiatives via quarterly reports.

The third independent governance expert report released by Mr McPhee last week stated that, out of the six initiatives laid down by the ABA, two initiatives are on track to be implemented by June 2017.

According to the report, by June 2017, participating banks will have enhanced existing customer complaints handling processes by each establishing a dedicated customer advocate.

The banks will have also implemented “the highest standard of whistleblowing policies” by June 2017.

Further, Mr McPhee said headway had been made with regard to improving bank staff remuneration and incentives arrangements.

The report referenced ANZ’s trial of a different approach to frontline incentives and measuring of staff performance over the past 15 months.

While the trial was well received by customers, with feedback showing increased levels of customer satisfaction with their branch experience, overall sales numbers declined across deposit products, home loans, wealth management products and business products, ANZ said in the report.

ANZ also said it will be introducing a new balance scorecard incentive plan for frontline staff in the retail banking business, which will be rolled out over the next few months.

According to the report, the banks are unlikely to meet the December 2017 deadline for implementing an industry register to improve recruitment practices in the banking industry - one of the six initiatives set out in the ABA plan.

“The development of an industry register, as a mechanism to improve recruitment practices and decisions in the banking industry, is one of the more difficult measures to implement given the legal issues involved,” the report said.

Mr McPhee said the review work by each bank and consequent development of overarching principles to ensure remuneration and incentives structures are aligned to good customer outcomes is due to be completed by December 2017.

“Effective stakeholder engagement and communications will be key to the industry and individual banks bringing customers and the broader community with them on this journey,” he said.

The next quarterly report is due to be delivered on 21 April 2017, which will mark 12 months since the industry announcement of its package of initiatives.

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