The new head of the Australian Bankers Association (ABA), former Queensland premier Anna Bligh, has taken a swipe at banks meddling with the corporate regulator’s press releases about bank’s bad behaviour.
The Australian newspaper revealed through Freedom of Information that the Australian Securities and Investments Commission (ASIC) has bowed to demands from big banks to water down the language it used in press releases about banks wrongdoing.
“Frankly I think that the public and the whole system needs to have confidence that regulators are completely independent from the institutions that they regulate,” Ms Bligh told The Business.
“I think that the reports today would alarm many people.
“I’m not aware of any particular incidence, but if there is evidence of it then I think it will erode public confidence.”
On whether the regulator should stop sending press releases to the institution concerned before publication, Ms Bligh said it was necessary for accuracy, but beyond facts banks should not be playing editor.
“I think on one hand there is a role to ensure that any public statements by the regulator are factually correct, but I think there is no role for banks to play in effecting the tone, the message, the content of any statement from the regulator,” she said.
Mr Bligh is the face of the banking sector’s attempts to address what she has called the “implosion of trust” in financial institutions.
On Wednesday, the ABA launched the Retail Banking Remuneration Review, conducted by former Australian public service commissioner Stephen Sedgwick, following numerous scandals in the banking sector that were found to be directly linked to staff bonuses.
Think bad financial advice, unnecessary duplication of accounts, aggressive credit card and lending practices and insurance policy switching.
The review wants payments linked to the number or value of products sold, offered, or distributed to retail and small business customers reduced and replaced with customer service goals.
“This means many banks should also revise their target setting, performance management, leader development and, most importantly, culture; and ensure they are aligned with the ethical, customer-centric philosophy that underpins my recommendations,” Mr Sedgwick wrote in the report.
Mr Sedgwick wants his 21 recommendations implemented by 2020 — which the ABA has endorsed and several members have come out already and said they would comply.
“What this review does is start to change the culture in Australian banks from a sales culture to a customer culture and I think that’s what customers want to see,” Ms Bligh said.
Mr Sedgwick believed his recommendations should also stretch to the mortgage broking industry.
Ms Bligh did not detail exactly what banks would be setting as performance goals to ensure better customer outcomes.
She said she did not believe that, had these changes been brought in earlier, any of the scandals would have been avoided.
Ms Bligh said the changes to remuneration are part of a suite of changes that the sector was adopting to improve its image and become a “better banking industry”.