Banking code of conduct should look to FOFA: FSU
An updated code of conduct being developed by the big four banks and the Australian Bankers' Association should look to implementing a ban on conflicted remuneration, according to the Financial Services Union (FSU).
The ban would be similar to the ban on financial advisers receiving commissions on investment and other products included in the Government's Future of Financial Advice (FOFA) changes.
FSU national secretary Leon Carter said those same FOFA principles should also apply on the credit side for products such as credit cards, insurance, personal loans and home loans.
"They would do even more good work on the credit side where they're pushing products on someone who can't afford them and [the products] do more damage," he said.
"The industry should be trained in taking care of customers who end up in financial difficulty - but we would say the code's first obligation is to ensure its practices, particularly its lending and selling practices, are responsible and centred around customers' genuine need rather than the institutions' need to sell products to make money."
Carter said changes to the code seemed to be focused on fixing a problem without any acknowledgement that the current business model and some of those industry practices are creating an environment where customers are being sold debt-related products they don't need.
"Whilst the community welcomes any moves by banks to take responsibility and assist customers in financial difficulty, you can't ignore the fact that the current business practices of the big four are based around forcing bank workers to push debt onto customers," he said.
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