The chief executive officers of Newcastle’s two locally-based banks say the recommendations of the Royal Commission into Misconduct within the Australian Banking, Superannuation and Financial Services Industry have given them “resounding confidence” in their customer-owned business models compared to “the profit-orientated cultures” of the major banks.
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Scott Morgan, chief executive officer of Greater Bank, which has its headquarters in Hamilton, said the building society had “long supported” the establishment of a royal commission into the sector and welcomed the findings handed down on Monday afternoon.
“While the banking royal commission has highlighted significant wrong-doing within our industry, it has also clearly outlined more than ever before the differences that exist between the major industry players and Australia’s comprehensive list of customer-owned financial institutions,” Mr Morgan said.
“We do not face conflicting priorities seeking to maximise returns to a separate group of shareholders.
“We are in full support of the commission and the recommendations outlined in the report, which will only strengthen our focus on ensuring that our customers are at the forefront of every decision we make, every day.”
Acting CEO of Newcastle Permanent Mark Williams said the royal commission had also given him “resounding confidence” in the Perm’s customer-owned model compared to “the profit-orientated cultures of the major banks”.
He said, however, all banks would have to implement some changes as part of reforms.
Developments in mortgage brokering would be of interest, he said, as Newcastle Permanent has relationships with brokers.
“All financial institutions are likely to be affected however it is difficult to gauge what the full impact will be on Newcastle Permanent at this stage,” Mr Williams said.
“Specifically there are recommendations related to the mortgage brokering remuneration structure which will be implemented from next year,” he said.
“We will be watching developments in this space with great interest.”
The report has recommended major changes to the remuneration of mortgage brokers, saying their services should be paid for by customers rather than through commissions from lenders.
Mr Morgan of the Greater said ensuring customers have a choice in their financial service providers was the “best way” to promote ethical conduct.
“We must continue to focus on and foster a strong and competitive environment that does not focus exclusively on the ‘Big Four’, but provides a level playing field for all participants,” he said.
“It is critically important that when implementing the recommendations strong and healthy competition is maintained."
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