The chief executive officers of Newcastle’s two locally-based banks say the recommendations of the royal commission into misconduct in the finance industry have given them “resounding confidence” in their customer-owned business models, compared to “the profit-orientated cultures” of the major banks.
Scott Morgan, chief executive officer of Greater Bank, based at Hamilton, welcomed the report handed down on Monday afternoon.
“While the banking royal commission has highlighted significant wrongdoing 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.”
Acting CEO of Newcastle Permanent Mark Williams said the royal commission had also given him “resounding confidence” in the Perm’s customer-owned model.
However, he said “all” banks would likely have to implement changes as part of reforms.
Specifically, he said it was “important” amendments to mortgage brokering did not “inadvertently reduce competition”.
Mortgage brokers are an important distribution channel for customer-owned organisations.Mark Williams
The report has recommended major changes to the remuneration of mortgage brokers, saying their services should be paid for by customers rather than by lenders giving commissions.
“Mortgage brokers are an important distribution channel for customer-owned organisations that do not have direct access to some markets,” Mr Williams said.
“It is difficult to gauge what the full impact will be on Newcastle Permanent at this stage.”
Mr Morgan said fostering “competition and choice” in financial service providers was the “best way” to promote ethical conduct.
“It is critically important that when implementing the recommendations strong and healthy competition is maintained,” he said.