The final report of Stephen Sedgwick’s review of retail banking remuneration has failed to find grounds for an “outright ban on all product-based payments” – but payments based solely on sales targets will end.
Stephen Sedgwick's Retail Banking Remuneration Review handed down its final report yesterday, with all four major banks pledging to fully implement its recommendations.
The report has recommended that incentives no longer be paid to any retail staff based directly or solely on sales performance, which will spell the end for sales targets and 'leaderboards' for bank tellers.
"Instead, eligibility to receive any personal incentive payments will be based on an assessment of that individual’s contribution across a range of measures, of which sales (if included at all) will not be the dominant component," said the report.
The end to 100 per cent sales-focused performance bonuses will also extend to third parties such as mortgage brokers – a view Mr Sedgwick said was reinforced by his reading of ASIC's recent report into the mortgage broking sector.
However, Mr Sedgwick said he did not find "sufficient evidence" of systemic risks of poor outcomes for customers to support an outright ban on all product based payments in retail banking.
As well as changes to performance payments, the report also recommends that the banks readdress their retail bank culture so that it becomes "demonstrably ethically and customer oriented".
The big four banks will have until 2020 to implement the proposals so that they have time to amend their "systems and other processes", said the report.
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