I was hoping to obtain more community traction around signing my petition for introducing a Bank Star rating for banks and financial products in Australia.
The “Bank Star Rating” would be based upon a criteria derived by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
It will allow Australians to compare banks more easily, empowering people to make better choices when purchasing financial services.
Using a familiar system of rating everyone can understand will help bring more transparency and accountability to the Financial Services industry.
I want to introduce something that can help everyday Australians better understand the products they purchase from banks.
Could I ask anyone who is interested to please sign and share to their social networks? Given how important banking impacts our lives I want to be able to help as many people as we can. Kind regards, Jason
This may be very difficult to achieve as it is highly likely that the problems identified in the Royal Commission have been corrected by the banks/financial institutions in question. If one looks at the Annual Reports or ASX company announcements one will see that the banks subject of some of the major findings have implemented processes to correct the identified problems.
Furthermore, to have ongoing star rating based on banks/financial institutions performance is also difficult as some services may be world class/industry leading while others within the same institution less than desirable. One may only deal with the bank with one service and therefore a general star rating may be inaccurate or misleading for that particular customer as it would/may not represent the services sourced/acquired.
In addition to that, the Royal Commission focused on the main banks in Australia and less time on the smaller or more independent institutions. Using the Royal Commission findings to rate all banks/financial institutions may not be possible or may incorrectly weight in favour of those which were not represented at the Royal Commission.
Another sector which also showed not to be performing were the regulators. Some of their actions possibly could have contributed to the findings as well.
While an star rating system type approach based on the Royal Commission findings might seem admirable, it is fraught with significant difficulties and might not achieve the outcomes which are deemed desirable.
The health star rating is filled with ambiguity and uncertainty and it is based on raw data that is not too hard to measure objectively. The problems largely stem from disagreement over the structure, definitions and relative importance not so much about the data.
A bank rating system would suffer all those problems plus lack of objectively measurable raw performance data. How do you measure honesty or putting the customer before profits? As phb says by the time the dust settles there will be few specific issues available to criticise. That doesn’t mean the culture or values that allowed those rorts to be constructed and to continue will have been corrected. How do you measure culture, values and ethical leadership?
What’s the alternative now though? Some kind of rating would be better than nothing. This is not aiming of a gold standard of perfection. The system will evolve over time, even the periodic table is unfinished. This is to set the conversation, get people thinking in terms of common denominators across financial services. We are able to define and make user-centric incredibly complex systems across engineering, science and maths. It really comes down to the corporate imperative of the banks and the will of the people as to how much rigour we want to apply to the system.
It would if it was reliable and used validated data. As outlined above, the challenges of using a simple star rating is immense (especially for a multiple service, multiple site operations like banks or insurers).
Maybe a better option would be for AFCA, for institutions under its control, to report say number of complaints per 1000 customers. This is also fraught wiith challenges as it would assume that all complaints go through AFCA (which is often not the sappcase as many complaints are resolved through direct contact with the institution negating escalation to AFCA.
Maybe the legislation is changed that instituions are required to report complaint numbers to AFCA…but there may be limitations on what sort of complaints as things like one complaining about an RBA interest rate rise flow on is not really the responsibility of the banks, for example.
Some complaints may also be frivilous (statement received later than usual) or vexatious (agitated customer creating multiple complaints from say a social media campaign). Should these be part of any measure?
As one can see, it is very difficult to measure institutions without extensive review, auditing and filtering of data.
I beleive that if the regukator was doing its job correctly, and was adequately financed to do its job, then the rating system could be superfluous as the industries would be compliant, with exception of the occasional rotten egg (say employee misconduct of one of the instituions) which is quickly rectified.
Maybe a better petition would be one requesting that the financial, insurance and investment industry regulators are provided with sufficient funds to perform their roles. This might provide a better long term outcome which would benefit all customers across the whole of the industry sectors.
Not if it was a substitute for something much more effective. You could see the industry arguing the rating and reporting system into the dust and nothing ever happening. FUD would rule. If you thought the miners routed Gillard, the Banks given such an escape route, could do over the next PM in half the time regardless of who it is.
The alternative is to make two changes.
Have a regulatory authority with the power and the will to investigate including following up and protecting whistleblowers. Something like the ICAC but aimed specifically at financial services. Even if the bank culture is corrupt it is impossible to involve a large number of people and not find somebody who has a conscience and will act on it and report the wrongdoing. This has happened before but there was no one to report to and they were consequently isolated and victimised.
Make executives personally responsible. Without this the smart operators are always tempted to try it on. They will gamble on not getting caught and that if caught they will be protected and possible suffer a minor career setback. When the penalty is just a big corporate fine there is no deterrent if the possible profits are bigger. If the penalty is huge personal loss of face and becoming a guest of Her Majesty for a year or two, then the gamble isn’t worth it because that is a terminal career move.
