A recently released report into retail bank remuneration does nothing to stop banks continuing to cross-sell “underperforming” super funds to customers, says Industry Super Australia.
The Retail Banking Remuneration Review, also known as the Sedgwick Review, was released yesterday. It was commissioned by the Australian Bankers’ Association (ABA).
The ABA said the recommendations in the report would result in Australia’s banks changing the way they pay and reward their staff.
However Industry Super Australia (ISA) says it does nothing to stop remuneration for cross-selling superannuation products.
“Although the review rightly addresses some of the unconscionable conflicted remuneration practices seen within the banking sector that have driven numerous ‘bank scandals’, it fails to address remuneration practices that are used to cross-sell superannuation products,” said ISA.
“This failure to consider super in the review will allow the big banks to continue to cross-sell super in an attempt to get their hands on more workers’ super.”
ISA is also concerned that poor outcomes for bank customers could undermine public trust in the whole superannuation system.
“The banks appear blind to the social policy objectives of compulsory super, which logically should be subject to stronger protections than other financial products,” said ISA Chief Executive David Whiteley.
“The banks must address the cross-selling of compulsory super urgently. If not, the government must step in.”
“It is a tall order to ask staff to both meet sales targets and genuinely serve customer needs when the products they are required to sell are designed to generate revenue and therefore may not be the best on offer.”
Mr Whiteley said that the cross-selling of super products, under general advice, should be subject to a ‘better-off’ test.
“Australians shouldn’t walk out of a bank branch worse off than when they walked in,” he said.
“A comprehensive ban on sales incentives for staff and a ‘better-off test’ is now required to protect the public from the cross-selling of compulsory super by banks.”