The big four bank has said that it supports a “self-regulatory model” when it comes to broker remuneration but highlighted that a “consistent approach” is needed, a newly released document has revealed.
In a document that was belatedly added to Treasury’s list of submissions on ASIC’s remuneration review this week (following the first publication of the submission list last week), Commonwealth Bank of Australia’s executive general manager for compliance, Jane Couchman, wrote that the bank supports the submission of the Australian Bankers’ Association (ABA) to the consultation and backs the findings of the ABA-commissioned Sedgwick Review.
Ms Couchman reiterated that the bank is “committed to implementing the recommendations”, which it has previously said would be finalised in the following financial year.
She wrote: “It is important that the industry’s approach to implementing the [Sedgwick Review recommendations] is factored into the government’s response to ASIC’s Report 516.
“We note and support the comments in the ABA’s submission regarding a self-regulatory model. However, it is important that the frameworks responding to both the Retail Banking Remuneration Review and Report 516 be aligned, and that a consistent approach across the industry is achieved.”
As such, CBA has suggested that it would be “helpful” if the financial services regulator were to provide “regulatory guidance” regarding the “most appropriate regulatory or legislative mechanism” for “further consideration” by industry.
While the big four bank did not make any specific suggestions on remuneration — unlike other major banks such as Westpac, which outlined the perils of tying broker commissions to loan-to-value ratios, and NAB, which suggested that the standard commission model be "adjusted" so they are based on the draw-down amount — it did support a uniform approach to any changes.
This aligns with the notions of the ABA, which is currently working with a number of mortgage broker and banking associations, as well as lenders, aggregators, brokers and consumer groups, to prepare policy solutions for government on “commission models, enhanced governance and greater transparency”.
Ms Couchman also said that the bank “welcomed initiatives to enhance industry transparency”, including clearer disclosure of ownership structures across the industry, but suggested that the basis for further change should “have regard to the effectiveness of existing regulated disclosures, including Financial Services Guides and other marketing materials”.
“In addition, consideration of future changes to disclosure should include consumer testing on the appropriateness of the current settings, and any possible future changes,” she said.
The CBA compliance GM went on to note that any “enhanced public reporting regime” should also “have regard to the nature of any commercially sensitive data”, as there may be some instances where data “should remain private and more suitable to inform the regulator’s supervisory activities”.
As such, she welcomed a separate, detailed consultation on the nature of the reporting (and whether there are any commercial or customer sensitivities that need to be taken into account) and suggested that further consumer testing on the publication of particular data could also be necessary.
Ms Couchman concluded: “CBA remains committed to making changes that deliver better customer outcomes and looks forward to further working with the government on implementing these initiatives underway.”
[Related: CBA CEO apologises to brokers]