Westpac has acknowledged it did not fully appreciate the risks in its financial planning business leading to the situation which was revealed by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Westpac chairman, Lindsay Maxsted has used the company’s annual report to state that better training and supervision, changes to the way financial planners were remunerated and/or better documentation of advice provided was required.
“Needless to say, having identified the above points, your board and management team have moved quickly to shore up the resources, systems and related reporting to deal with any shortcomings,” he said.
“Some of the improvements cannot happen overnight, particularly when technology systems need to change, but in these cases, our monitoring of the risks has been heightened and extra steps have been put in place,” the chairman said.
He said the bank was also accelerating customer remediation, recognising that where Westpac had made mistakes it needed to promptly take steps to fix the issues.
Elsewhere in his annual report letter, Maxsted said some employee remuneration arrangements had inadvertently contributed to poor behaviour and that while remuneration was not directly related to all the bank’s conduct failures in some cases remuneration had been poorly designed “and the payment of commissions or the existence of other short-term incentives linked to sales may have resulted in poor behaviour”.
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I could, however, argue that quite the opposite was evident. For any person involved in the financial planning industry within one of the big four banks over the last 10 years will be totally conversant with the cavalier manner to which senior management treated their staff and their customers.
This was certainly not the 'inadvertent' results of remuneration arrangements as suggested by Mr. Maxsted, but rather part of a concerted and deliberate effort to use every resource available aimed at maximising fund inflows.
There would be many of you out there, who has worked in these toxic environments and can recall those ' you have to be on the same page or you need to share the vision, etc, that would be regurgitated by indoctrinated management when your FUM targets failed to be reached. And of course, followed by the usual threat of 'being managed out' or whatever the phrase for getting rid of you was at the time.
And no better way to demonstrate the high-pressure sales culture of the banks than an exchange from the Royal Commisiion. Whilst his witness statement, one of the banks head of advice of advice, come up with all the 'right answers' about clients coming first and their staff is their biggest resource. The real textbook answers. That was until counsel assisting, Rowena Orr, suddenly broke from her line of questioning and asked if the witness would describe themselves as a salesperson? Shock and indignation across the face of the witness." Absolutely not" was his immediate reply, followed by another textbook speech about financial planning actually being the exact opposite. Somewhat convincing, that is until Ms. Orr interjected with the following. "I took the liberty this morning of accessing your LinkedIn profile, and you actually describe yourself on there as an expert salesperson!
The look on this witness was absolutely fantastic, and after the usual 'umms and ahs' and long swigs of water, his only response was, I didn't know I had better check.
Anyone from the big banks will now the word salesperson only became toxic at the commencement of the Royal Commission. Up until then, being rated as good at selling was the greatest of all compliments. Remember the league ladders and leaderboards, and conferences for the high achievers.
Mr. Maxsted you need to take responsibility and stop putting a spin onto some very serious topics. You need to look up the meaning of the word fiduciary duty.
Great points APL !
I think as much as the RC identifies the work that the industry needs to go through to restore trust among consumers, similarly, the same trust needs to be restored and backed with actions from senior management to advisers and support staff.
Ingrained behaviours don't change overnight
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