The chairman of Bank of Queensland has revealed his desire to implement the removal of pay and sales structures ahead of the royal commission report.
Bank of Queensland’s chairman Roger Davis, in a statement lodged with ASX ahead of the bank’s 2018 AGM, revealed that the bank’s review into pay and sale models was going ahead.
“Efforts are being made to promptly comply with all the other BEAR and Sedgwick requirements regarding remuneration in the sector, through a thorough review of the bank’s commission structure and the removal of any misaligned or conflicted remuneration or sales commission structures. This is a highly complex and complicated task, but it is being implemented,” he said.
Mr Davis said that the royal commission had shone a light on remuneration and that the Bank of Queensland had adjusted remuneration for its executives accordingly.
“In determining remuneration for the past year, we have been conscious of the high quality of the BOQ executive team and our view that the interests of shareholders are also best served by adopting remuneration policies and practices that are designed to retain and motivate this team,” he said.
The board had reduced the short-term variable remuneration by 20 per cent in 2018; it was the lowest incentive amount paid to senior management, including the chief executive in the past five years.
Mr Davis said the bank had many internal programs already that had been designed to meet the new standards of banks.
“We already have a solid ethical framework and are currently reviewing our hardship processes and the depth of our complaints reporting.
“We have already strengthened the independence and powers delivered to the customer advocate at the bank to deal with client issues and complaints and now seek more granularity when reviewing complaints, hardships and service issues at board,” he said.
But Mr Davis warned that the bank was not immune to the challenges facing the sector off the bank of the royal commission and justifiably so.
“We are not immune from these adverse industry factors but changing the community’s perception is a much more difficult task that just remediating your own issues, as an ebbing tide carries all before it, regardless of how well you can swim,” he said.
Over 2018, the cash earnings was two per cent lower than 2017 with a result of $372 million but total income increased two per cent on an adjusted basis to $1.11 billion.
Mr Davis said that, despite the relatively good result, the total shareholder return was negative but shareholders must remember that it had been a tough year.
“In reviewing the 2018 financial year, there is no word better to describe it than challenging. Challenging for the industry, challenging for the bank and challenging for the bankers,” he said.
Mr Davis said the bank would continue to face challenges but the continued expansion of assets like Virgin Money would set them up well for success.
“We do remain confident that our strategy to focus on niche segments, being customer-focused and diversifying across geographies, channels and markets in order to facilitate low-risk growth is delivering results.”
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
The Financial Services Council has cautioned that if not executed well, the extension of the Banking Executive Accountability Regime (BEAR) ...
BREAKING A former investment analyst has pleaded guilty to insider trading and communicating inside information relating to the purchase and...
The prudential regulator has ramped up its efforts around setting how financial institutions prepare for climate change, indicating it will ...