Bank tellers at the Commonwealth Bank of Australia will no longer have any financial incentive to flog products, in the bank’s latest move to improve its battered public image.
CBA announced on Friday that, starting immediately, “financial outcomes” would be removed from tellers’ performance assessment criteria, with customer service being the sole measure of a teller’s performance.
In other words, pay rises would be determined by how many satisfied customers a teller had, not how many products they had flogged.
The move followed several steps taken by the bank to endear itself to consumers and shareholders – most prominently scrapping ATM fees – following the AUSTRAC money-laundering scandal.
CBA executive general manager Angus Sullivan claimed this latest move would make banking with CBA “fairer, simpler and more transparent”.
“Customers can be confident that our tellers are not being paid to sell them products,” he said.
In taking this step, the bank will hope to show it has moved away from the mercenary culture that has plagued it in recent years, and that culminated in a damaging scandal in the bank’s financial advice business in the early part of the decade.
That scandal saw a number of unscrupulous advisers allegedly give clients bad advice simply so they could collect the sales commission.
In response, the then-Labor government in 2013 banned the payment of commissions through its ‘Future of Financial Advice’ (FoFA) reforms.
Friday’s announcement saw CBA take a voluntary step beyond the requirements of FoFA.
CBA is by far the nation’s biggest bank, and until recently was Australia’s most valuable company.
But that changed in August, when news broke that AUSTRAC was launching civil proceedings against the bank for an alleged 53,700 “serious and systemic” breaches of money laundering and counter-terrorism legislation.
This sent the bank’s share price tumbling, a fall from which, two months on, it has barely begun to recover.
On August 2, one CBA share was worth $84.20. On Friday it was worth $76.60.
For the year to date, investors in the bank have seen the value of their holdings fall by 7 per cent. Three of four major banks have all done considerably better.
In other words, the AUSTRAC scandal has had a stark effect on the value of the company.
To deal with this, the bank has taken a number of steps to persuade its millions of shareholders and customers that it is still a high value proposition.
The first of these steps was to get rid of the bank’s chief executive Ian Narev, who will depart some time in the first half of next year.
The next – and probably most high profile – step was to scrap ATM fees for non-customers. The other three banking behemoths immediately followed suit.
Then, in early October, consumer advocate CHOICE launched a scathing criticism of CBA’s ‘Dollarmites’ school banking program, calling for a ban on the scheme in Australia’s schools.
The bank responded promptly to this criticism, announcing on the same day that it was scrapping a practice that saw it pay commission to participating schools every time a student open a bank account.