Australian Banking Association Makes Changes After Royal Commission

The Australian Banking Association made significant changes after the Royal Commission, which was a major turning point for the industry.

One of the key changes was the establishment of a new complaints system, which allows customers to easily report issues with their bank.

This new system is designed to be more transparent and accountable, with clear guidelines for resolving complaints.

Customers can now expect a more streamlined process for reporting issues, with banks required to acknowledge complaints within two days.

The Australian Banking Association also introduced new rules for remuneration, which aim to reduce the influence of bonuses on lending decisions.

This change is meant to promote more responsible lending practices, and prevent banks from prioritizing profits over customer needs.

As a result, bank employees are now incentivized to prioritize customer outcomes, rather than just meeting sales targets.

The Australian Banking Association (ABA) has made some significant changes in response to the financial services royal commission. The ABA will change the way institutions manage a customer's estate when they have died, ensuring fees are no longer charged for services never received.

This move is a direct response to the royal commission's scathing interim report, which slammed banks for a culture of greed. The report found that banks had pursued short-term profit ahead of the interests of customers, leading to a culture of greed.

The ABA will also seek changes to its Future of Financial Advice reforms to remove provisions that allow grandfathered payments and trailing commissions. These commissions have been a lucrative business model for the industry, but have also encouraged financial advisers to put their own income streams ahead of the best interests of customers.

According to the ABA, banks have already refunded $1 billion to customers charged fees where no service was provided. This is a significant step towards rebuilding trust in the sector.

Here are the key points:

The ABA's CEO, Anna Bligh, has been vocal about the need for change, describing the royal commission's interim report as "a day of shame" for the banking sector.

The Australian Banking Association has been calling for a change in the country's open banking rules, known as the Consumer Data Right (CDR) regime. This regime was implemented in July 2020, but only 0.31% of bank customers have used it to share their data between service providers.

The CDR was supposed to promote competition and improve customer outcomes, but it's clear that it hasn't lived up to expectations. The ABA's CEO Anna Bligh said it's time to go back to the drawing board and find a new pathway forward.

The CDR has been costly, with the banking industry investing around 1.5 billion Australian dollars since 2018. This investment hasn't led to the desired results, with customer uptake being significantly lower than expected.

Smaller banks have been particularly affected by the CDR, incurring disproportionately higher compliance costs compared to major banks. This has forced them to make investment trade-offs, diverting resources away from improving customer outcomes and supporting local communities.

The Customer Owned Banking Association (COBA) has also expressed concerns, saying that customer-owned banks have invested 100 million Australian dollars in the CDR without seeing any significant benefits.