The Australian Bankers’ Association (ABA) has announced an independent review of remuneration practices, to be led by former Australian Public Service Commissioner Stephen Sedgwick AO.
The review will cover product-based payments and commission structures of customer-facing, non-customer-facing, and non-bank sales roles, and according to ABA chief executive Steven Münchenberg, will build on the existing Future of Financial Advice reforms.
“Banks recognise that how they pay staff is an important factor in determining community trust and confidence in banks,” he said.
Mr Sedgwick will review remuneration policy to ensure it does not “lead to poor customer outcomes”, and provide guidance on remuneration incentives that encourage a good result for the customer.
Gina Cass-Gottlieb of Gilbert + Tobin Lawyers will assist the review, as will David Heazlett of Mercer, providing legal and remuneration advice respectively, with support from a stakeholder advisory panel comprising several senior staff from industry and advocacy bodies.
“We want to ensure that across the banking industry, when people are rewarded for selling products and services, they are putting customers’ interests first,” said Mr Münchenberg.
The review is one of several initiatives announced by the ABA in April 2016 to improve standards and accountability within the industry.
The terms of reference for the remuneration review state that the findings will be submitted by Mr Sedgwick “no later than 31 March 2017”, though it hopes Mr Sedgwick will be able to submit the findings by the end of 2016.
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