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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA: Banks to review commissions, whistleblower protections: Sounds like BIG Cover-UP the Banks Policy!

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Banks to review themselves?  Mad Hatter Morrison no doubt.  Does that means CEO's $10 million in criminal bonuses from fraudulent Low Docs will be axed or will they too be swept under the Banker plush carpets?  Creepy stuff....but I will ask Members to put it to the test.

Banks to review commissions, whistleblower protections

April 21, 2016 - 11:59AM
  • 138 reading now

Clancy Yeates and James Eyers


The Australian Bankers' Association on Thursday announced a review of conflicted payments to staff, including commissions for selling certain financial products. Photo: Louie Douvis

The banking industry will launch a sweeping review of commissions paid to sales staff and has committed to improving protection for whistleblowers, as lenders respond to intense political pressure over misconduct by staff and fend off ongoing calls for a banking royal commission. 

The Australian Bankers' Association on Thursday morning announced a review of conflicted payments to staff, including commissions for selling certain financial products. It said these payments would be scrapped or changed where it led to poor outcomes for customers.

Banks say they will also work with regulators to "ensure the highest standards of whistleblower protections by ensuring there is a robust and trusted framework for escalating concerns".

It is understood the senior members of the banking industry have been intensely working on the plan for the last six weeks and the process has been driven by the chief executives of the banks, who have been looking for a way to relieve intense pressure building on the industry in the wake of a series of conduct scandals.

The Future of Financial Advice (FOFA) reforms eliminated commissions for wealth products including superannuation and investments. Legislation is currently before the parliament to halve the level of commissions for the sale of life insurance. But commission-based pay is still common for core banking products including mortgages. 

With regulators including the Australian Prudential Regulation Authority upping the pressure on banks to consider how their remuneration plans influence conduct and culture, and after the Trowbridge report highlighting a range of concerns about commission-based pay in the life insurance industry, bank bosses realise that paying staff commissions for selling banking products needs to be pulled back to ensure customers are not sold products that are not suitable to their needs. 

"Each bank commits to ensure it has overarching principles on remuneration and incentives to support good customer outcomes and sound banking practices," the ABA said in a statement.

The work on commissions will be carried out through an industry group led by Gina Cass-Gottlieb, a partner at law firm Gilbert + Tobin. The banks said they will publish public quarterly reports on their progress, with the first coming out in three months. 

It is understood that the Australian Competition and Consumer Commission has been approached by the banks, who want to ensure their proposal to work together does not fall foul of competition laws.

 Australian Bankers' Association chief executive Steven M├╝nchenberg said that overall levels of banker pay should not be reduced by any changes that are made. "We are not going to be reducing peoples remuneration, but expect there to be some restructuring," he told Fairfax Media. 

He said that the level of concern among the members of the ABA had grown in recent weeks as the sector came under sustained criticism, and "has become such that the industry absolutely needs to respond substantially, and we feel we have done that today." The banks response goes further than the measures announced by Treasurer Scott Morrison on Wednesday

With the government's package of reforms to strengthen oversight of the banks not containing any measures to strengthen whistleblower laws, the banks on Thursday they will "standardise the protection of whistleblowers across banks, including independent support, and protection against financial disadvantage". 

After the government said on Wednesday it would create a "one stop shop" for handling bank complaints by consolidating various ombudsman services, the banks said they would also boost processes for handling complaints by installing an "independent customer advocate" inside each bank for customers in disputes with their lender.

The banks also said they will implement an industry register to identify rogue advisers and bring forward a review of the Code of Banking Practice to be completed by the end of the year. The banks will also work with ASIC to "enhance the current breach reporting framework", the ABA said. 

It came as new figures showed customer satisfaction with the big banks fell in the first three months of the year, after fallout from the industry-wide hikes in home loan interest rates late year year.

Roy Morgan research said the average proportion of satisfied big four customers had dipped to 80 per cent, from 80.9 per cent at the end of last year, and calls for a royal commission could could dent the banks' reputations further.

Bank bosses response 

ANZ Bank chief executive Shayne Elliott said in a statement that while some of the work was already underway, it was a" public commitment from the entire banking industry that we are going to work harder and more consistently to improve the way we deal with customers and resolve issues."

"It's also a recognition that we need to work harder to improve the way we respond when things go wrong and it gives our customer reassurance that they will be dealt with fairly and transparently in their dealings with the bank," Mr Elliott said.


Westpac Banking Corp chief executive Brian Hartzer said in a statement banks have given a lot of thought to how conduct and culture be strengthened across the industry. He said the framework would cover making sure product-based payments are aligned to good customer outcomes; ensuring customer complaints are dealt with efficiently and effectively; and making sure a safety net is in place in the form of a strong regulator. 


"The plan includes a number of practical measures that will empower customers, enhance standards and increase transparency across the industry," Mr Hartzer said. "We believe these actions will lift standards across the banking and financial services sector and bolster the existing strength of our regulatory framework." 


National Australia Bank chief executive Andrew Thorburn said the proposals announced on Thursday are designed to reinforce standards of service, integrity, trust and ethics and pledged to push for legislation to enforce the findings of the review into remuneration.


"This announcement today is to make sure that no matter what bank you bank with, customers are safe in the knowledge that each bank puts their customers first," Mr Thorburn said in a statement.  


"We believe that our customers deserve the peace of mind that our employees are rewarded for recommending the right products and services for the customer. We intend to strengthen the alignment of remuneration and incentives to customer outcomes. We will work with regulators to implement changes and, where necessary, seek regulatory approval and legislative reform."

Commonwealth Bank of Australia chief executive Ian Narev is expected to address banking culture in a lunchtime speech to the Australian Institute of Company Directors in Melbourne. 

The package of changes comes after the banks have found themselves under intense political pressure, after Labor called for a royal commission into the industry, citing a series of scandals in which customers have been mistreated.


John Brogden, the chief of the Australian Institute of Company Directors, told The Australian Financial Review the big problem with bank culture is the misalignment of incentives.  "What every company in Australia needs to understand is that having a bad culture can do more damage than strong short to medium -term numbers can ever do good," Mr Brogden said. "Financial incentives have to reward good culture as well as good performance. It's clear that in some instances that is ignored."

On Thursday morning Commonwealth Bank, Westpac, National Australia Bank and Westpac each committed not to pass on to customers any costs from the government's plan for the industry to fund the corporate regulator.


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