The extent of the reputational damage to the Australian banking sector has been “so great” that it may be “impossible” for the sector to recover, says CHOICE.
Speaking at the ASIC Annual Forum in Sydney yesterday, CHOICE chief executive Alan Kirkland said the initiatives put forth by the Australian Bankers’ Association (ABA) were an “interesting example” of the difficulties banks face in regaining consumer trust.
“There’s been an enormous loss of trust in our major financial institutions and there’s a lot of effort and a lot of money and some really well designed reviews and processes going on to try and rebuild that, but my sense at the moment is that it’s not really getting anywhere,” he said.
“Let’s give it another 12-18 months and see whether that works, because I think if it doesn’t have any impact, it actually says that when the damage to trust is so great, that it’s almost impossible to get it back.”
A fellow forum presenter, author and academic Rachel Botsman, said that attempting to rebuild trust without changing the existing system or its culture was simply “hot wind”.
“I think it’s actually patronising to consumers to believe that we can regain their trust [without a change in culture] because the link between trust and culture is really interesting because as we all know, culture is what happens when no-one’s looking,” she said.
“Until people can trust that the banks’ interests are aligned with them when they are not looking, I don’t think we can rebuild trust in the financial system.”
Responding to these comments, ABA chief executive Steven Münchenberg told InvestorDaily that “banks know they have not always lived up to the community's standards, let alone their own standards” and the industry was making a number of changes to address community concerns.
Mr Münchenberg said the package of initiatives issued by the ABA in 2016, which addressed several areas of concern including treatment of whistleblowers, staff incentives and complaints handling, was the first step.
“We have since built on these initiatives and announced further improvements to help customers and rebuild confidence in banks,” he said.
“This is not a sugar-fix; it is the beginning of a long-term plan to raise standards, fix problems and make banking better for customers.”
The “unprecedented” package aims to prevent firms from laying off employees in order to ensure the economy “bounces back” once the t...
A wealth management group has dumped its previous earnings guidance, indicating the pandemic-driven market weakness will drag its fund manag...
Diversifying strategies has failed to pay off for a number of investors, with a survey finding more than a third using investment grade cred...