Weekly articles for SEO | Diligent
Some of the biggest headlines during the Banking Royal Commission came from the “fees for no service” scandal, where customers reported being charged for services like financial advice that they had never received – sometimes they were even charged after death.
The strong message from the Commissioner is that the banking industry must turn from profit-focused to service-focused – that the systemic focus on profit and bonuses at all costs must come to an end. Justice Hayne was clear that this culture change must be led from the top, and charged boards and directors to give serious consideration to how their decisions impact the whole organization.
This culture change extends to remuneration processes. That customer service representatives felt pressure to sell add-ons, and that some remuneration could end up doubling a rep’s annual salary, was singled out by Justice Hayne as driving misconduct. He recommends that commissions should be largely eliminated from the financial sector – including commissions for mortgage brokers, financial planners and insurance sales. His reasoning is these commissions can create conflicts of interest, as there is so much vertical integration in the industry and it’s unclear to customers that this mortgage broker recommending that bank is ultimately feeding its parent company more sales. Unsurprisingly, the brokerage and superannuation sectors, in particular, are resistant to this.
Read the full article, and others, on the Diligent website.