Here’s the 6-point plan Australia’s banks released so they’ll ‘do the right thing’

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Australia’s banks have a six-point plan to ensure ethical behaviour when dealing with customers.

“Our customers, shareholders, employees and our communities rightly expect the behaviour of banks to meet high ethical standards as we look after their financial needs,” says the Australian Bankers’ Association.

“Subject to regulatory approval, we are committing to a further six actions to make it easier for customers to do business with us and to give people confidence that when things go wrong, we will do the right thing.”

The banks today released an industry statement and a series of measures designed to protect consumer interests, increase transparency and accountability and build trust and confidence in banks.

The statement from the banks as a group follows yesterday’s announcement that the corporate watchdog ASIC (Australian Securities and Investments Commission) is getting $127 million in extra funding so it can investigate misconduct in the sector.

The banks say they want to to give people confidence that when things go wrong, “we will do the right thing”.

Here’s the industry’s six-point plan:

1. Reviewing product sales commissions
An independent review of product sales commissions and product based payments. “We intend to strengthen the alignment of remuneration and incentives and customer outcomes,” the banks say in an industry statement. “We will work with regulators to implement changes and, where necessary, seek regulatory approval and legislative reform.”

2. Making it easier for customers when things go wrong
Establish an independent customer advocate in each bank to ensure retail and small business customers have a voice.

3. Support for employees who blow the whistle on inappropriate conduct
“We will ensure the highest standards of whistleblower protections by ensuring there is a robust and trusted framework for escalating concerns,” the banks say.

“We will standardise the protection of whistleblowers across banks, including independent support, and protection against financial disadvantage. As part of this, we will work with ASIC and other stakeholders.”

4. Removing individuals for poor conduct
“We will implement an industry register which would extend existing identification of rogue advisers to any bank employees, including customer facing and non-customer facing roles. This will help prevent the recruitment of individuals who have breached the law or codes of conduct.”

5. Strengthening the Code of Banking Practice
“We will bring forward the review of the Code of Banking Practice. The Code of Banking Practice is the banking industry’s customer charter on best practice banking standards, disclosure and principles of conduct.

“The review will be undertaken in consultation with consumer organisations and other stakeholders, and will be completed by the end of the year.”

6. Supporting ASIC
“We support the government’s announcement to implement an industry funding model. We will work with the Government and ASIC to implement a ‘user pays’ industry funding model to enhance the ability for ASIC to investigate matters brought to its attention. We will also work with ASIC to enhance the current breach reporting framework.”