Westpac CEO Brian Hartzer appeared in Canberra today before the House of Representatives Economics Standing Committee.
Here is the full text of his opening statement:
I am joined today by David Lindberg, Chief Executive of Westpac’s Business Bank. In my address to you in October I observed that a banking licence is a privilege, that comes with a responsibility to earn and maintain the trust of our customers.
- This Committee’s review and first report;
- The Carnell review into Small business banking; the Ramsay review of external dispute resolution schemes; the Productivity Commission inquiry into open data; and the Parliamentary Joint Committee review on Life Insurance,
- We also have the Sedgwick review on remuneration and the Khoury review of the Code of Banking Practice, both of which were established by the banking sector itself.
- Tomorrow the banking industry is holding a switching summit with consumer groups, government representatives, and the credit card schemes. This will explore what practical steps can be taken to make switching even easier for customers.
- Phil Khoury has delivered a thorough review of the Code of Banking Practice. Through the ABA, the industry is currently reviewing the recommendations with the goal of re-drafting the Code to be more transparent and customer-friendly by the end of the year.
- Meanwhile Steve Sedgwick, the former public service commissioner, is well advanced with his review of product-based payments across the industry. This is an important area for restoring trust and Westpac expects to implement all of Mr Sedgwick’s recommendations when he provides his final report.
That trust hasn’t always been achieved — and I described this as a trust gap. Since then Westpac and the overall banking industry have made good progress on the issues that have led to that trust gap.
We are taking the issues raised by this Committee—and others—very seriously, and we are committed to improving.
In the past six months alone we have participated in seven separate reviews relating to financial services, including:
These reviews are already translating into action that will make a difference for customers.
In the meantime Westpac is already taking action on staff payments.
I told you last time that we had made changes to the way Westpac tellers are paid, with incentives now based on service rather than sales.
Today, I can confirm that we have extended this across the St.George, Bank of Melbourne, and BankSA brands. This means that tellers across all Westpac Group branches will only be paid an incentive for providing great service.
We have further announced that we will remove individual productspecific sales targets for personal bankers across all brands.
And that we are changing incentive rewards for personal bankers to equally weight service to customers and sales, with 50 per cent to be based on customer measures and 50 per cent on financial metrics.
These are important steps to demonstrate our commitment to delivering great service and remove any perception of a conflict of interest in how our people serve customers. We are also conscious of community concerns about credit cards, which was reflected by the Committee last time we met.
Westpac has identified the need for a no-frills, low interest rate credit card product to complement our existing range of credit card offerings. This new card will be available to customers in the coming months. It will have an interest rate of less than 10 per cent and a low credit limit.
At the same time, we continue to listen to our customers and identify opportunities to improve our products and services, in line with our strategy to be a great service company.
Finally, Mr Chairman I would like to comment on two areas raised in this Committee’s first report and the Carnell review—namely, data and small business. As I said last time, Westpac supports enhanced data sharing and in fact we said this in our initial response to the Productivity Commission.
At the same time it is important that we get implementation of data sharing with third parties right, in order to protect our customers from fraud, privacy breaches, and inappropriate use of their data. A significant data breach under a new regime would undermine trust and confidence in data sharing and ultimately impact our shared objective of increasing transparency and innovation in the sector.
However, we think there are a number of steps that could be taken immediately to start Australia down this path.
On small business, we support the direction of the Carnell Report because we have a shared objective to make small business stronger. On some of the recommendations there are critical implementation issues to work through, and we need to be mindful of anything that would lead to a reduction in lending. On many of the recommendations we are already compliant.
For example, for small business loans under $1 million secured by property we are in the process of removing all non-monetary default clauses. We are also working towards removing them from all such loans under $3 million, and this would cover 8 out of 10 small business loans.
In addition we are reviewing and redrafting our small business contracts to be shorter and less legalistic. This is an important step in improving service and giving time back to small businesses so they can get on with running their business.
And in October last year we appointed our new Customer Advocate, Mr Adrian Ahern, the former Global Chairman of Norton Rose Fulbright. . Adrian started in his new role in November. He is independent of the business and has the power to overturn decisions made by our internal dispute resolution teams for retail and small business customers. Importantly, his decisions are binding on the bank.
Mr Chairman, there is still more to do but I believe Westpac — and the industry as a whole — are on the right path to closing the trust gap. This doesn’t mean we won’t make mistakes. I said last time that, like any large business, we aren’t perfect and we get things wrong. What I hope we always get right is that where we make mistakes, we accept responsibility, and fix things for our customers.
David and I are now happy to answer your questions.
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