The review into retail banking remuneration will raise awareness of sales-driven practices within banks among Australian consumers but it will not change the underlying sales culture of banks, insurance and other financial institutions.
Such was the opinion of Jim Stackpool, director of national group of advisory firms, Certainty Advice Group, who also said a banking royal commission would not aid the cause either.
“Thanks to reports like Mr Sedgwick’s, more Australians will come to realise the banks are more like drug companies providing product and not like hospitals or doctors providing services,” Stackpool said.
“His reports highlights that people’s behaviours will always align to how they are rewarded. If Mr Sedgwick’s recommendations are implemented, more Australians will realise how their banker or adviser is being remunerated.
“Then they will better understand if the advice or product offered is in their best interests.”
The comments came in light of the report compiled by Stephen Sedgwick in April and commissioned by the Australian Bankers’ Association, which found no systemic issues to warrant an outright ban on all product-based payments in retail banking but did find that some current practices encouraged behaviour that was inconsistent with consumer interests and should be changed.
Director of William Buck, Sydney, Scott Girdlestone said: “Whilst the banks have a right to provide advice, there will always be a natural conflict between shareholder demands (and therefore management’s strategy) of the product manufacturer and advisers providing advice under the licence of the product manufacturer”.
Stackpool added that consumers better understood the product-pushing sales culture as opposed to non-conflicted professional advice similar to what they received from their doctor.
