The limited terms of reference used in Stephen Sedgwick’s final independent review into retail banking remuneration means the review failed to scrutinise areas of banking that have caused scandal over recent years, according to the Finance Sector Union of Australia (FSU).
While welcoming the Sedgwick Review for contributing to the debate around the need to rebuild trust in Australian banks, the FSU said the review was commissioned by the Australian Bankers’ Association (ABA) on behalf of the banks, using their terms of reference.
FSU national secretary, Julia Angrisano called for a Royal Commission into banking in order to fully examine the workings of banks and its impact on staff and customers.
“What we need is a full inquiry into banking and the financial services sector so Australians can be confident that when they interact with financial institutions they won’t be exploited,” Angrisano said.
“If we are to rebuild trust in financial institutions, it's not enough to deal with pay alone. Banks must also change management culture, the way performance targets are set and the way performance is managed,” she said.
She also said Sedgwick’s recommendations for cultural change, overhaul of pay modes, performance target setting and performance measurement would only bring “piecemeal” change through slow adoption over more than three years.
“Our members are also seeking guarantees from the banks that they won’t cut the pay of directly employed home loan lenders while sales and trailing commissions continue to be paid to third party brokers,” she said, while urging banks to meet with the union to discuss their response to the report.
Financial advisers working under a fee-for-service model where payments were not linked to products sold were excluded from the terms of reference in the Sedgwick’s review.