On 19 April 2017, Stephen Sedgwick published the Final Report of his Independent Review of product sales commissions and product based payments in retail banking in Australia. The Report examines the arrangements that lead to incentives, commissions and bonus payments for retail staff of banks (tellers, sellers and their supervisors and near managers) as well as third parties (including brokers, aggregators, franchises, introducers and referrers).
The Report makes 21 recommendations for change. Although the extent of change will vary, almost every bank may change at least some of its practices to comply with these recommendations.
According to Sedgwick, adoption of the recommendations will mean that:
- in-scope retail bank staff (importantly, mortgage sellers) and their managers will no longer receive incentives based directly or solely on sales performance; and
- instead, eligibility to receive any personal incentive payments will be based on an assessment of an individual’s contribution across a range of measures, of which sales (if included at all) will not be the dominant component; and the maximum available payments will be scaled back significantly for some roles.