Called the Reference Checking & Information Sharing Protocol, the new blacklisting system will be operational by the end of February, the Australian Bankers Association (ABA) said in a statement.
The ABA, which represents Australia’s banking industry, said the protocol has been developed in response to calls by the regulator for the industry to do more to address concerns about poor advisers, or so called “bad apples”.
“It (the protocol) is intended to promote better information sharing about the performance history of financial advisers focusing on compliance, risk management and advice quality,” the ABA said.
In addition to independent financial advisers, the protocol will also apply to bank employees by adding standardised questions on conduct background for all prospective employees. These changes will be published in March.
Change commitment
“The protocol is part of the banking industry’s commitment to professionalise financial advice, help minimise poor conduct and improve trust and confidence in financial advice. It was developed with the input and support of banks that provide financial advice and AMP Group,” the ABA said.
The move follows a series of allegations and claims about poor service and even charging for services not delivered made against the country’s big banks and its largest insurer AMP, which are responsible for providing a large part of the financial advice available to ordinary consumers.
Poor conduct
The criticism of the banks has already prompted the government to introduce legislation to set up a new independent standards body to oversee the country’s 22,500 financial advisers, enforce a uniform educational standard and police an official code of ethics.
That initiative followed a series of mis-selling scandals and dodgy practices that have come to light in recent years. These had often been carried out by the country’s largest banks – The Commonwealth Bank Australia, ANZ, NAB, Westpac – which provide the bulk of financial advice in Australia.
Last year, the financial services regulator, the Australian Securities and Investments Commission (Asic), told the country’s ‘Big Four’ banks and leading wealth manager AMP to repay at least A$178m (£111m, €125m, $136m) to more than 200,000 customers after charging them for financial advice they did not receive.
Better banking
The latest move by the banks in response to the criticism they have been receiving is part of a “Better Banking program”, outlined this week, which designed to introduce new initiatives reflecting research conducted in 2016 into what customers like and don’t like about banking, and what is needed to make banking better.
The new initiatives include:
- An independent review of product-sales commissions and product-based payments to bank staff in the retail divisions (the Sedgwick Review), which is due to report in early April.
- Improved protections for whistleblowers, which will be in place from July.
- An independent review of the Code of Banking Practice (the Khoury Review’), which will assess the existing code and identify areas where banks’ standards could be improved. Its findings are expected in early February.
- Support for the Federal Government’s independent standards body currently before Parliament, to help fast-track the adoption of the new standards across the financial services industry.
- Advocating for the introduction of a new compensation scheme for consumers who have received poor advice from a financial adviser so they aren’t left out of pocket if that adviser goes out of business. The ABA said this was needed to help rebuild trust and confidence in financial advice, not just financial advice provided by banks.
- New resources to develop information about banking, including a list of the most common types of bank fees and how to avoid them, and a step-by-step guide on how to make a complaint with to a bank.
- The appointment of customer advocates in each bank, to prioritise and escalate complaints. Major banks have appointed their advocates and other banks will have theirs in place before the end of March, ahead of the original bank commitment by June.
The chairman of the ABA and chief executive of National Australia Bank Andrew Thorburn said: “Our focus is on our customers and ensuring as an industry we provide the right service and right products to meet their needs.
“We have heard the concerns of Australians and we are committed to taking action so that banking with all of us is a better experience.
“This program of initiatives is our commitment to continue to raise the standards, service and trust in our industry,” he said.
