Employment After The Royal Commission – How the landscape has changed for employers and employees

Since the completion of the Hayne Finance Services Royal Commission earlier this year I’m often asked what impact the findings have had on recruitment. Whilst the news wasn’t pretty and damaged the trust many Australian’s had in the banking system it is important to remember that with nearly 170,000 employees in banking alone the absolute vast majority of staff continue to uphold the highest levels of professionalism.

In advance of the commission, the focus was already shifting with the Sedgwick review into how banks needed to change how to reward and pay staff. The Australian Banking Association has stated that these are the core recommendations to come out of the review:

• “No longer paying retail bank employees incentives based directly or solely on sales.
• Where incentives are paid, they should be based on a range of measures of which financial measures is not the dominant component.
• Incentives paid should be product neutral and no longer include payments related to additional products or cross-selling products.
• Examining workplace culture and leadership frameworks to ensure they are aligned with good customer outcomes.
• Increasing transparency of remuneration arrangements with third parties, such as mortgage brokers, including stopping payments directly linked to loan size and introducing more robust performance management like that used with employees.”

Likewise, The Royal Commission made some of the following recommendations:

Banking –

• Mortgage brokers must act in the best interests of the borrower, not the bank providing the loan. Breach of this duty would result in a civil penalty,
• Lenders should be banned from paying trailing commissions to mortgage brokers for two to three years

Financial Advice –

• All ongoing fee arrangements must be reviewed annually by the client,
• Financial advisers who lack independence must, before providing personal advice to retail clients, disclose this to the client in writing,
• ASIC should consider further reducing the cap on commissions in respect of life risk insurance products

Culture, Governance and Remuneration –

• All financial services entities should review at least once a year the design and implementation of their remuneration systems for frontline staff,
• All financial services entities should, as often as possible, review their own culture and its governance, identify and deal with any problems identified and determine whether the changes made have been effective,

The impact on you as a candidate is significant. Your value as an employee has shifted from a focus on sales to the following:

Customers’ Best Interest –

The introduction to the Hayne report found that providing a service to customers was relegated to second place. Sales became all important. Those who dealt with customers became sellers.

When interviewing for a role your focus naturally should be on providing a service or product that works in the best interest of the customer. Provide examples of where you have provided customers a variety of options identifying the advantages and disadvantages of each scenario. Exploring in more detail a customers’ situation and desired long-term outcome.

Lone Wolves Need Not Apply –

The solo salesperson will increasingly find it difficult to survive in the new environment. Your ability to generate sales whilst disregarding a shift in expectations will see you isolated and likely unrewarded. Incentives will no longer be determined only on sales outcomes. Take the conversation away from just the sales result and focus on how you achieved the result, pay kudos to those people internally and externally that helped with the opportunity and the benefit this had for the customer.

Collaboration is Key –

Your value internally to a business (and how you’ll be rewarded) will now be measured on numerous factors, one of which will be the way in which you work with other people in the organisation. When interviewing for a role your focus needs to be on providing examples of teamwork. Sharing your best practice with others in the business, mentoring more junior staff, offering examples where you’ve provided positive feedback.

Values, Values, Values –

Your values need to align with that of the business. When being invited for an interview it is imperative that you have familiarised yourself with an organisation’s values and culture. These values are usually found on a business’s website. Your values and responses to questions will need to mirror those of the organisation. This is especially important when having to undertake a cultural assessment online. More and more your assessment will be evidence of your cultural suitability with an organisation – give it the time it deserves.

No Grey Areas –

There are no grey areas … ever! Your responses, your history, your integrity needs to reflect this. How have you left previous employers? Does your version of events tally with your ex employers?

An organisation (with your permission) will conduct ABA checks with past banking employers. The ABA background check protocol requires the Former Employer to disclose to the Hiring Employer whether an Employee has, during their current employment or during the Request Period:

• Been dismissed as a result of Misconduct
• Resigned after the Employee had been notified by the Former Employer of an Investigation
• Been notified by the Former Employer of an Investigation where the Employee has not yet resigned or been dismissed

Compliance –

In line with the banking sectors commitment to improving standards and compliance the banking ads that have (according to seek) experienced the largest growth have been within the compliance and analysis space. You need to talk to your experience in ensuring the highest levels of compliance. Provide detail of any audit reports or scores you may have received. Should you have been unsuccessful with an audit, provide mitigating reasons (e.g. perhaps you were in the early days of your career can provide evidence of an improvement) or look to have another and more recent report completed.

In closing, it’s a brave new world that’s not all too different to the expectations on previous candidates. Be the best version of yourself with a focus on serving the best interests of clients. Working together with others in order for everyone to enjoy the benefits of a career in financial services.