Revelations about banks incentivising staff and third parties to push products on customers, such as unnecessary mortgages, credit cards and deposit accounts, have eroded public trust.
Former Australian Public Service Commissioner Stephen Sedgwick’s independent review last year found some of the banking sector’s current practices carried “an unacceptable risk of promoting behaviour that is inconsistent with the interests of customers and should be changed”.
Now a rewritten “code of conduct” has just been released by the Australian Banking Association (ABA) and approved by the Australian Securities and Investment Commission (ASIC).
ABA chief Anna Bligh says the code represents a stronger commitment to ethical behaviour from the banks and will be mandatory for its retail banks members.
The new code provides for improved protections for small business borrowers and at its current setting of applying to small businesses who borrow up to A$3 million, the code is expected to cover between 92-97% of businesses in Australia.
National Bank (NAB), Westpac and ANZ bank chiefs are among those quick to confirm they will be implementing the code – some ahead of the July 2019 deadline.
In reality some Australasian banks have long been ahead of the curve when it comes to ethical selling practices and corporate social responsibility (CSR). Not all banks have been behaving badly.
One, that has just been recognised internationally for its service-centred culture, is Teachers Mutual Bank (TMBL). It has been recognised by the Ethisphere Institute (EI) as one of the ‘World’s Most Ethical Companies’ in 2018.
It is one of only 135 companies and four banks internationally – and the only Australian company – that meets the EI standard for transparency, integrity, ethics, and compliance. EI believes integrity and transparency impact the public trust and the bottom line of any organisation.
TMBL turned to Integrity Solutions in 2009 when it was still called the Teachers Credit Union. It adopted Integrity’s training systems and set about changing the culture of its business.
TMBL is now one of Australia’s largest mutual banks and provides financial products for more than 190,000 members and has more than A$6.6 billion in assets, following successful mergers with UniBank and Firefighters Mutual Bank. In the first half of 2017 Roy Morgan Research revealed TMBL led customer service rates across the top 15 consumer banks in Australia.
Megan Brice, managing director of Integrity Solutions for Australasia, says her company’s approach is guided by a simple philosophy: integrity earns trust, trust builds relationships and relationships create long-term value.
“This is something many people learn only when their business faces a crisis and they quickly find they haven’t banked any goodwill to help them ride it out,” Brice says.
“Corporate social responsibility has had a lot of lip service, but the ethical selling practices side of it needs to become an ingrained part of the overall culture.