Diane Tate: Banks and mortgage brokers are working together to effect change

Australian Bankers' Association Deputy CEO Diane Tate explains how banks are working to ensure changes to mortgage broker remuneration preserve competition and promote better customer outcomes.

Diane Tate: Banks and mortgage brokers are working together to effect change
Australian Bankers' Association Deputy CEO Diane Tate explains how banks are working to ensure changes to mortgage broker remuneration preserve competition and promote better customer outcomes

As part of one of their largest reform programs to improve conduct and culture, Australia's banks are making major changes to how they pay staff, including removing sales based incentives for their tellers, supervisors and managers. 

This follows an independent review of remuneration in retail banking – the Sedgwick Review – which made 21 recommendations to improve payments to staff and third parties, including mortgage brokers, as well as governance and performance management systems. 

In April this year banks pledged to implement all recommendations. This commitment remains unchanged. 

Change is already underway. Banks are developing new remuneration practices for retail staff, embedding customer outcomes in ‘balanced scorecards’, as well as establishing new remuneration principles to align payments and incentives with sound banking practices and good customer outcomes across the bank.     

Separate to these changes, banks are also working with mortgage brokers. 
Mortgage brokers, who have been the subject of a remuneration review by ASIC, play an important role in making sure Australians have choice in accessing the finance they need to purchase their home. Banks want to ensure that any reforms don't compromise competition or customer choice.

The ABA believes that the recommendations made by ASIC and Mr Sedgwick are strongly aligned so should be worked through together. Both the ASIC and Sedgwick Review relate to improving remuneration and governance arrangements in mortgage broking and delivering better customer outcomes.

That's why the ABA is working with the entire industry and consumer representatives, through the Combined Industry Forum, to develop simple and sustainable solutions that preserve competition, promote customer choice and create better customer outcomes. 

The Forum’s main purpose is to work collaboratively to develop an industry response on remuneration and governance arrangements. The Forum’s first report will be presented to the Federal Government in November.

The industry is committed to working together to respond to changing community expectations. Customers should have confidence when dealing directly with a bank or through a mortgage broker that their interests are being put first. 

The best way to achieve better customer outcomes while preserving competition and promoting customer choice is through a collaborative partnership between banks, mortgage brokers and consumer representatives.

Diane Tate is the deputy CEO of the Australian Bankers’ Association, which represents all of Australia’s major banks and a number of non-majors. The ABA commissioned the Sedgwick review into remuneration in retail banking, although the review was carried out independently of the ABA. 
 

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