Open Banking a Big Win for Consumers – ABA

From ABA.

A recent survey has found that Australians believe that banks are better at keeping their personal data secure than government agencies, online retailers or social media platforms.

And while men and women were fairly even, the Galaxy research found that those in regional centres trust their bank to protect their data even more than their metro counterparts (70 per cent regional vs 61 per cent for metro areas).

Those with the highest level of trust are aged between 40 and 49 years old.

Australian Bankers’ Association CEO, Anna Bligh said banks take data security and privacy very seriously, spending millions to ensure their systems are safe.

“With the introduction of Open Data across the Australian economy next year, consumer privacy and security is front of mind.

“Open banking will enable customers to get more value out of their data by opening it up to be easily shared with other banks and finance providers. In the future, a customer will be able to open their mobile phone app and with the touch of a button, direct their bank to transfer their data to another finance provider.

“Giving customers the ability to share their data more easily will help them to shop around for deals and get the best product for their needs.

“This represents a significant change from the current system and puts the power squarely in the hands of the customer, allowing them to decide how and when, or if, their information is shared,” she said.

Open data will also make comparing bank products and services easier as financial institutions standardise such things as terms and conditions and pricing.

Small businesses can also benefit from being able to share their transaction data with their accounting software packages. Bank transaction data could be tied to their invoices and receipts so businesses can readily track their finances.

The ABA will host its second Open Data Symposium today, aimed at continuing the discussion around the benefits to consumers and what the industry needs to do to prepare for the change.

The Galaxy research surveyed 1000 Australians online earlier this month for the Australians’ Attitudes to Digital Innovation & Data Security poll.

ABA Declares Progress On Bank Reforms

The Australian Bankers’ Association has welcomed the latest progress report from former auditor-general Mr Ian McPhee AO PSM, which has found that banks are on track regarding the six reform initiatives.

Mr McPhee stated that since the previous report, a number of initiatives are now being implemented, which is good news for customers and the industry.

Banks have already introduced three initiatives – the appointment of customer advocates who help customers resolve issues and proactively improve customer outcomes, the adoption of new whistleblower protections, and the conduct background check protocol when hiring staff.

The remaining three initiatives are showing good progress.

ABA Chief Executive Anna Bligh said it’s encouraging that the industry’s reform program is starting to gain traction and deliver real benefits to customers.

“Banks across the board are serious about change and rebuilding trust and confidence within the community. Introducing these initiatives will better protect customer interests and increase transparency and accountability,” she said.

“The banking industry is currently undergoing the greatest program of reforms seen in decades. It’s vital that the momentum continues, so banks can meet the needs and expectations of the community.

“The ABA appointed the former Public Service Commissioner Stephen Sedgwick AO to review how bank tellers and other customer-facing bank employees, their managers, and third parties are paid by banks. The industry adopted all the recommendations and are now in the implementation phase,” Ms Bligh said.

“The industry understands that through the combination of leadership, performance management, remuneration structures, behavioural standards and culture, a real difference is being achieved.”

Progress since the last quarter McPhee review includes:

* Adoption of best practice whistleblowing policies by 19 banks (last bank to finalise by end of year).

* The Code of Banking Practice is now with key stakeholders for feedback. The new Code is on track to be finalised by December 2017.

* Four banks have published their overarching principles on remuneration and incentives ahead of the December deadline.

“The determined effort that has delivered the reforms to date is set to continue in coming months as banks finalise their implementation of the industry’s Better Banking program,” Ms Bligh said.

A copy of Mr McPhee’s latest report is available at betterbanking.net.au.

ANZ CEO Shayne Elliott next Chairman of the ABA

The Australian Bankers’ Association today resolved to nominate ANZ Chief Executive Officer Shayne Elliott as Chair at its Annual General Meeting in early December.

Mr Elliott will succeed current Chair of the ABA, National Australia Bank Group Chief Executive Officer Mr Andrew Thorburn.

Commenting on the nomination Mr Elliott said: “The banking industry is working hard to build trust with customers, the community and with federal and state politicians on all sides. While we have made significant improvements in recent times, rebuilding community trust is a long-term issue and change within the industry needs to be bolder and faster.

“I look forward to making a positive and progressive contribution as the industry continues with the important task of delivering sustained change which delivers better outcomes for customers and helps rebuild our reputation.

“I would like to thank Andrew Thorburn for his stewardship of the ABA during this time and I look forward to building on his strong legacy of industry reform,” Mr Elliott said.

ABA Chief Executive Anna Bligh welcomed Mr Elliott’s nomination.

“Shayne has a long and distinguished career in banking and will bring considerable energy and commitment to the transformation process led by Andrew,” Ms Bligh said.

“The industry is currently undergoing the greatest program of reforms that banking has seen in decades. It’s vital that this continues and that we work to rebuild trust and better service the needs and expectations of the community,” she said.

By convention, the Chair of the ABA rotates between the Chief Executive Officers of the major banks. With the CEO succession announcement at the Commonwealth Bank in 2018, the next organisation on rotation is ANZ.

“For the sake of continuity it was decided to bring forward Mr Elliott’s term rather than seek an alternate chair,” Ms Bligh said.

“There are a number of reviews and reforms to be introduced in the coming year, so consistency is important. I am looking forward to working closely with Mr Elliott in his new role,” she said.

Mr Elliott’s term will begin after the ABA’s Annual General Meeting in December.

ABA Ups The Ante On SA Bank Tax

 

The Australian Bankers’ Association’s new website – jobsnottaxes.com.au – launched today, invites the people of South Australia to email local members of Parliament to take a stand against the tax.

“South Australia needs jobs to grow its economy, not new taxes that will undermine this objective,” ABA Chief Executive Anna Bligh said.

“Over the past 10 years, full time jobs in South Australia grew by an average of 0.2 per cent per year, compared with 0.9 per cent across Australia.”

A new statewide Galaxy poll (Galaxy surveyed 801 people in South Australia between 8 – 12 September 2017 via telephone and online) conducted this month shows that 52 per cent of South Australians oppose the tax compared with only 38 per cent who support it. Half of people surveyed believe the tax would negatively impact on jobs in the state.

The website also features new television ads with members of the South Australian community urging the Government to dump the tax and focus on jobs and growth.

 

“In 2016, the five banks impacted by the proposed tax paid around $1.5 billion in dividends to shareholders in South Australia and lent $10 billion to South Australians to buy their own home,” Ms Bligh said.

“This is a tax on all South Australians and will impact shareholders, customers and bank employees,” she said.

 

 

… As Does Westpac

All the major banks have removed foreign ATM fees. The ABA welcomed the move.

Statement from Anna Bligh, Australian Bankers’ Association Chief Executive:

“The ABA welcomes the announcement from the major banks today to abolish ATM fees.

“It’s a boon for customers and makes banking more affordable for everyday Australians.

“This is the latest in a suite of initiatives by banks to create better products and services for customers and boost customer choice, including reducing interest rates on credit cards and offering fee-free transaction accounts.

“A competitive banking system is good for customers and good for the sector.”

The BEAR Roars!

The Treasury released the exposure draft of the Banking Executive Accountability Regime, open for consultation until 29th Sept 2017.

The Bill amends the Banking Act to establish the BEAR: an enhanced accountability framework for ADIs and persons in director and senior executive roles.

  • The BEAR imposes a clearer accountability regime on ADIs and people with significant influence over conduct and behaviour in an ADI. It requires them to conduct themselves with honesty and integrity and to ensure the business activities for which they are responsible are carried out effectively.
  • It does this by creating a new definition of ‘accountable person’. An accountable person is a Board member or senior executive with responsibility for management or control of significant or substantial parts or aspects of the ADI group.
  • The general requirement placed on accountable persons is framed in the context of their particular responsibilities. These will be clearly defined in accountability statements for each accountable person and an accountability map for each ADI group.
  • Accountability maps and statements are designed to give APRA greater visibility of lines of responsibility. The maps will clearly allocate responsibilities throughout the ADI group, to ensure that all parts or elements of the group are covered.
  • An ADI must comply with its BEAR obligations. These include new accountability, remuneration and key personnel obligations. An ADI must ensure that it has a remuneration policy consistent with the BEAR, its accountable person roles are filled and it has given accountability statements and maps to APRA.
  • ADIs must set remuneration policies deferring an accountable person’s variable remuneration to ensure accountable persons do not engage in behaviours inconsistent with BEAR obligations.
  • APRA will have additional powers concerning examination and disqualification to let it implement the BEAR.
  • If an ADI breaches its BEAR obligations, significant civil penalties may be imposed by a court.
  • Recognising there are different business models and group structures in the banking industry, the Bill uses both high level principles as well as prescribed detail. The BEAR will work with existing legislative and regulatory frameworks

The ABA were unimpressed in a statement from Anna Bligh, Australian Bankers’ Association Chief Executive:

“The seven day consultation period announced by the Federal Government on new banking executive accountability laws is grossly inadequate and playing fast and loose with a critical sector of the economy.

“The industry recognises that improving senior executive accountability is crucial for customers to have trust in banks.

“Banks want to work with the Federal Government to get this right, but just seven days to consult is not good enough.

“This is a significant piece of reform that impacts on the integrity of banks and the stability of the financial system and it needs thorough scrutiny.

“It’s an entirely new addition to the system of corporate governance in Australia. The Government’s timeframe risks serious unintended consequences.

“The ABA urges the Government to extend the consultation period and do the proper due diligence to ensure that the objective of improving senior executive accountability is met.”

 

Low levels of trust, confidence and transparency in the banking industry – ABA

The Australian Bankers’ Association has today released new research that measures and tracks community trust and confidence in banks.

Less than one third of those surveyed had high levels of trust in the banking industry. This is below the international benchmark.

There are significant differences in attitude between those who have higher levels of trust, and those who do not. Those with low trust scores believed the banks were drive by profit, not focussed on customer needs and had terms and conditions which are not transparent.

The research conducted by international firm Edelman Intelligence will be used by the industry to assess the impact of the wide ranging reform agenda currently underway across the sector.

“The research shows low levels of trust, confidence and transparency in the banking industry with a clear need for improvement,” according to ABA Chief Executive Anna Bligh.

“Interestingly, survey respondents report stronger levels of trust with their own personal banking experience (53 per cent) than they do with the industry as a whole (31 per cent).

“This points to a real opportunity for banks to translate the experience customers have with their own bank into higher levels of trust in the sector as a whole,” she said.

The Edelman Intelligence research has also measured the community’s knowledge of current industry-led banking reforms and their views of these reforms.

“While awareness of the reforms is low, respondents have a clear view that the reforms are on the right track to improve banking culture and customer experience,” Ms Bligh said.

“It is heartening that while challenges lie ahead for banks, customers are receptive to banks’ massive reform program.

“As a result of more than 20 inquiries, reviews and investigations into banks in the past two years, Australia’s banks are now implementing one of the largest reform programs in their history.

“Along with Federal Government reforms such as the new Banking Executive Accountability Regime, a new one-stop shop for complaints and substantial improvements to contracts for small business lending, the industry has initiated its own reforms which include a new Code of Banking Practice, new whistleblower protections and changes to staff remuneration.

“It’s a big program of transformation and future benchmarking will look at the full breadth of changes that are underway,” Ms Bligh said.

Anna Bligh will today outline to the Good Shepherd Microfinance Conference in Melbourne the importance of measuring and benchmarking trust in banks.

“It is critical to the whole banking industry that real progress is made in rebuilding trust and respect with the community,” she said.

“The fact that this research has been done, that it is being set as a tangible benchmark and being made public, is an indication the banking sector is serious about reform and prepared to be held accountable.”

Key findings from the report include:

  • When asked to rate the importance of the initiatives in making banking better, each initiative scored between 62 and 75 per cent.
  • The initiatives that will have the greatest impact on trust are strengthening the Code of Banking Practice and changing the way bank staff are paid.
  • Respondents are most aware of actions their main bank has taken in relation to the removal of individuals from the industry for poor conduct (53 per cent), followed by a strengthening of commitment to the Code of Banking Practice (51 per cent).
  • Based on the 2017 Edelman Global Trust Barometer, Australians’ trust in the financial services sector has increased slightly, but is still four points behind the global average.

“Banks are trusted when they’re considered stable, well-regulated and reliable. This research shows just how much more work needs to be done before trust in bank culture and conduct reach stronger levels than seen in this research,” Ms Bligh said.

“The research will be conducted regularly to assess progress and identify areas for further reform.”

The Edelman Intelligence research consisted of an online survey of 1,000 Australians and 12 focus groups between May and June 2017. More information is available in the report.

SA to face High Court challenge over bank tax

From The ABA.

Australia’s major banks have resolved to mount a challenge to the SA bank tax if it is legislated, the Australian Bankers’ Association announced today.

“The South Australian Government will face a High Court challenge if it introduces its proposed bank tax,” ABA Chief Executive Anna Bligh said.

“South Australia is a state that needs to create more jobs and encourage businesses to invest, not introduce new taxes,” she said.

Recent polls of more than 2000 voters and 400 business owners in South Australia showed widespread opposition to the tax and concern about its impact on jobs.

“Banks are campaigning against the tax because it is not in the interests of South Australians, and they are prepared to fight it in court,” Ms Bligh said.

“Other states will also face a Constitutional challenge in the High Court if they propose to single out banks for new taxes.

“There is no justification for new taxes on Australia’s major banks. Banks are already the nation’s largest taxpayers, contributing $14 billion in taxes last year.

“On top of that, banks paid $26 billion in dividends to shareholders and superannuation funds in 2016.

“That’s a benefit to almost every working Australian and new taxes on banks will erode this benefit,” she said.

Banks commit to negotiating commission changes

From Mortgage Professional Australia.

The Australian Bankers Association wants commissions to be decoupled from loan size but is prepared to negotiate with brokers to find a new model, it has announced.

In an exclusive interview with MPA, the ABA talked through its submission to the Treasury and its views on commissions, volume related bonuses, soft dollar and self-regulation. “The ABA doesn’t have any preconceived ideas about the exact figures of the new [commission] model: what we are doing is working through the combined industry forum,” an ABA spokeswoman told MPA.

The combined industry forum, which involves the ABA, MFAA, FBAA and COBA, first met in June and is scheduled to meet later this month, with the broad objective of responding to ASIC’s remuneration review. Participants hold a range of different views, with the ABA telling MPA that “we do believe that the standard commission model will need to be de-linked from loan size”

However, the ABA played down suggestions of major changes to commission: “we don’t think that the concept of upfront and trail should be abandoned: we think that the entire model needs to be considered in the light of what promotes good customer outcomes”

Under the shadow of Sedgwick

The recommendations of the Sedgwick Review look likely to determine the ABA’s stance on questions of remuneration.

The ABA says Sedgwick’s recommendations ‘intersect’ with those of ASIC: Sedgwick called for commissions to be completely decoupled from loan size by 2020, but the ABA told MPA this was a final deadline: “banks are taking immediate steps to see how they can implement the Sedgwick recommendations but are we mindful about how these can be worked through with the rest of the industry.”

Although previously criticised for taking unilateral action, the ABA stated that “in terms of activity outside the forum, the ABA’s energy is invested in pursuing the objectives of the forum and our member banks are also committed to implementing the recommendations of the [Sedgwick] Review.”

ABA supports self-regulation

The combined forum has been portrayed by MFAA CEO Mike Felton as a potential basis for industry self-regulation and the ABA hesitantly support this view.

Although the initial objective of the forum was to respond to ASIC, the ABA told MPA, its purpose did “not necessarily” end there: “depending on the Government’s response and acceptance of the solution, we would look at self-regulatory mechanisms to implement it.” In principle the ABA supports self-regulation on the basis it can drive change “more quickly, and avoid unintended outcomes for industry and consumers.”

Consumer advocates criticised self-regulation for inadequately representing consumer interests. However, the ABA told MPA this was unfair: “an immediate objective of the forum is to set up an appropriate and responsive channel to socialise our thinking with consumer groups and obtain their feedback. We’ll be acting on that quickly: it’s not in response to the submission: it was always our intention of the forum.”

Banks Pay The Most Tax – ABA

The Australian Bankers’ Association has today released a new report showing the banks targeted for a new tax in South Australia are actually among the highest corporate taxpayers in the country.

“South Australian Treasurer Tom Koutsantonis claims that a new tax will ensure ‘the sector contributes its fair share’, despite the fact that the industry paid over $14 billion in tax last year alone,” ABA Executive Director – Industry Policy Tony Pearson said.

“In terms of tax paid, it is banks first, daylight second. Banks make the highest contribution by far to help governments at all levels fund essential public services such as hospitals, schools and roads, and income support for those in need.”

The report, Taxes and other levies paid to governments in Australia by the banking industry, shows that in 2016 banks contributed over half of all income tax paid by the top 200 ASX companies.

“The Weatherill Government simply doesn’t get it,” Mr Pearson said.

“The banking industry makes a vital contribution to the community. Banks employ 140,000 people around the country – around 8,000 of those in South Australia.

“In 2016, banks paid $25 billion in wages and salaries to staff, $26 billion in dividends to shareholders – many of whom are mums and dads – and $66 billion in interest on bank deposits and bonds,” he said.

A copy of the report is available here.