Australia's banks need more than pledges from CEOs to improve their culture following a series of scandals at their financial planning and insurance arms, a leading finance expert has warned.
Professor Paul Kofman, dean of business and economics at the University of Melbourne, says while promises to improve bank culture by CEOs were welcome, it was not enough to fix the erosion of trust that had opened up between the public and the industry.
More Business Videos
ANZ boss admits mistakes
Incorrect fees charged to customers, poor banking culture and financial planners breaching the law are some of the issues raised at the parliamentary banking inquiry.
Speaking at a conference on banking and culture in Melbourne on Tuesday, he says culture needed to be improved throughout organisations, not just top-down.
"The public image of banks and financial institutions leaves much to be desired and is hardly a glowing endorsement for the profession," he says.
![Banks will need more than a media appearance by their CEO to improve culture, a senior finance expert says.](/web/20161122171215im_/http://www.smh.com.au/content/dam/images/1/1/z/2/p/s/image.related.articleLeadwide.620x349.gsts6b.png/1479714604405.jpg)
"Without a complete overhaul of recruitment, internal governance, and performance development, it seems unrealistic to expect senior management to change culture simply leading by example."
The big four banks have faced intense political scrutiny over a series of scandals involving the mistreatment of customers, prompting CEOs to apologise for what they say is a "trust gap" between them and the community.
But Mr Kofman says pledges from senior management was not enough to fix the problem.
"If a change is to occur, it will require more than a media appearance by the CEO."
![Reserve Bank governor Philip Lowe has called on the banks to address their incentives-based culture.](/web/20161122171215im_/http://www.smh.com.au/content/dam/images/g/s/q/1/d/j/image.related.articleLeadwide.620x349.gsts6b.png/1479714604405.jpg)
Reserve Bank governor Philip Lowe has called on the banks to address their incentives-based culture, saying the industry needs to return to being a strong service profession rather than a "marketing or product distribution" business.
The Australian Bankers' Association executive director of retail policy Diane Tate says the industry was addressing culture through its six-point plan announced in April.
"Banks accept that they haven't always lived up to the standards set for them," she says.
"You can't regulate culture but you can promote ethical behaviour, and that can be instilled by values of organisational leadership and performance management."
Mr Kofman, who will address the industry alongside corporate watchdog head Greg Medcraft, says contributing to the problem of trust was the fact that areas of the banking industry remained unregulated.
"Technologically disruptive providers like Fintech, P2P, crowd-funding and various offshore markets remain largely out of scope for our guardians," he says.
Suncorp director Sally Herman says company boards also played a role in ensuring a positive culture was being upheld at the banks.
"From a board perspective, it's about making sure there is that alignment between policies and behaviours," she says.
0 comments
New User? Sign up