Westpac drops commissions for all customer facing staff, but what about the rest?

Westpac drops commissions for all customer facing staff, but what about the rest?

Westpac has changed the way it pays staff who interact with customers, whether it’s in a branch or over the phone, choosing to drop controversial commission payments in favour of paying them a fixed salary. 

The move -- intended to eliminate the conflict between sales targets and a customer’s best interests -- was recommended to the industry after a special government inquiry, and goes one step further than CBA, NAB and ANZ.

Why does it matter if branch staff were paid commissions?

The commissions paid to frontline workers have been in the spotlight for the last few years, culminating in a series of recommendations made in a final report commissioned by the Australian Banking Association, and handed down against the backdrop of 2017’s banking Royal Commission.

“...Some current (commission) practices carry an unacceptable risk of promoting behaviour that is inconsistent with the interests of customers and should be changed,” Stephen Sedgwick wrote, in his final review of Retail Banking Remuneration. 

“... Incentives have at least appeared to drive behaviour that was not in the best interests of customers and, on occasion, scandalously so.”

The 21 recommendations of his review were mostly adopted by the banking industry, but to various degrees.

‘We’re making an industry leading move’: Westpac

Westpac announced yesterday it has eliminated incentive payments for its customer-facing employees, and instead is replacing them with a permanent fixed pay increase. 

“Introducing a fixed pay increase and removing short term variable incentives for more than 4,000 branch and customer care roles will help give our customers confidence that the service they receive is wholly focused on their banking needs,” Richard Burton said, the acting chief executive of the bank’s consumer division. 

“...This decision will provide these employees with more certainty around their remuneration and recognise the individual service they provide to customers.”

Westpac eliminated sales commissions for branch tellers in 2016, and removed all other commissions for 2300 staff in 2019, replacing them with a $500 annual increase. 

The new agreement extends the changes to other staff who deal with customers, such as phone operators, by replacing other incentives with fixed pay increases, Mr Burton said.

The changes will affect Westpac’s subsidiaries as well, including St George, Bank of Melbourne,and BankSA, when the new remuneration agreement takes effect on October 1.

Do CBA, NAB and ANZ pay their staff commissions?

All big four banks pledged to follow the recommendations of the “Sedgwick report” following its publication in April 2017. Most typically do pay commissions, but they've reworked how they are calculated and are mostly not based on sales performance. 


Commonwealth Bank stopped paying its branch and contact centre staff commissions that are purely based on financial outcomes, the bank confirmed.

“We implemented the Sedgwick review recommendations in 2017 and de-linked sales to performance for our banking tellers in branch,” a spokeswoman told RateCity.  

“This means we primarily focus on the individual’s contribution to providing exceptional customer service, rewarding them for delivering better customer outcomes, not financial outcomes.”

Other CBA branch staff have their performance evaluated based on a 'customer service' metric.  

“We have a balanced scorecard approach to performance assessment,” the spokeswoman said. “This is largely related to managers assessing employees in relation to customer service and not sales.”


NAB’s branch and contact centre staff don’t have individual targets, but they do have collective targets, a spokeswoman confirmed, and some roles receive commission payments.

The majority -- 98 per cent -- of staff performance is linked to a “group” target. The spokeswoman did not account for the remainder.

The bank measures frontline staff performance using a scorecard, and no single criteria has a weighting greater than 33 per cent, the spokeswoman said, adding this bested the recommended guidelines.

“NAB is continually reviewing its approach to performance and reward frameworks to ensure they drive the right values and behaviours and deliver positive outcomes for customers,” she said. 


ANZ’s approach is similar to NAB’s in that it no longer sets individual sales targets for its in-store staff. Instead, it typically has team targets for branches, the bank confirmed.

But with store traffic on the decline due to the COVID-19 pandemic, the targets have been changed to cover regions.

These key performance metrics are not tied to any commissions, a spokesman told RateCity, adding they consider “all outcomes with equal weighting” during reviews. 

“ANZ moved to team based targets for generalist bankers in branch settings in 2018,” he said.

“As a result, financial performance is now assessed as a contribution to team outcomes rather than individual performance against sales goals.” 

The incentives don’t just apply to staff in a bank at ANZ. The spokesman confirmed they also apply to phone staff interacting with customers.

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Do the big four banks have guarantor home loans?

Yes, ANZ, Commonwealth Bank, NAB and Westpac all offer guarantor home loans. These mortgages are also offered by many other banks, credit unions and building societies.

Do mortgage brokers need a consumer credit license?

In Australia, mortgage brokers are defined by law as being credit service or assistance providers, meaning that they help borrowers connect with lenders. Mortgage brokers may not always need a consumer credit license however if they’re operating solo they will need an Australian Credit License (ACL). Further, they may also need to comply with requirements asking them to mention their license number in full.

Some mortgage brokers can be “credit representatives”, or franchisees of a mortgage aggregator. In this case, if the aggregator has a license, the mortgage broker need not have one. The reasoning for this is that the franchise agreement usually requires mortgage brokers to comply with the laws applicable to the aggregator. If you’re speaking to a mortgage broker, you can ask them if they receive commissions from lenders, which is a good indicator that they need to be licensed. Consider requesting their license details if they don’t give you the details beforehand. 

You should remember that such a license protects you if you’re given incorrect or misleading advice that results in a home loan application rejection or any financial loss. Brokers are regulated by the Australian Securities & Investment Commission (ASIC), as per the National Consumer Credit Protection (NCCP) Act. 

What are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.

How to break up with your mortgage broker

If you find a mortgage broker giving you generic advice or trying to sell you a competitive offer from an unsuitable lender, you might be better off  breaking up with the mortgage broker and consulting someone else. Breaking up with a mortgage broker can be done over the phone, or via email. You can also raise a complaint, either with the broker’s aggregator or with the Australian Financial Complaints Authority as necessary.

As licensed industry professionals, mortgage brokers have the responsibility of giving you accurate advice so that you know what to expect when you apply for a home loan. You may have approached the mortgage broker, for instance, because you have questions about the terms of a home loan a lender offered you. 

You should remember that mortgage brokers are obliged by law to act in your best interests and as part of complying with The Australian Securities and Investments Commission’s (ASIC) regulations. If you feel you didn’t get the right advice from the mortgage broker, or that you lost money as a result of accepting the broker’s suggestions regarding a lender or home loan offer, you can file a complaint with the ASIC and seek compensation. 

When you first speak to a mortgage broker, consider asking them about their Lender Panel, which is the list of lenders they usually recommend and who may pay them a commission. This information can help you decide if the advice they give you has anything to do with the remuneration they may receive from one or more lenders.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

What happens when you default on your mortgage?

A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

If you do default on a mortgage repayment you should try and catch up in next month’s payment. If this isn’t possible, and missing payments is going to become a regular issue, you need to contact your lender as soon as possible to organise an alternative payment schedule and discuss further options.

You may also want to talk to a financial counsellor. 

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Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.

How does Real Time Ratings work?

Real Time RatingsTM looks at your individual home loan requirements and uses this information to rank every applicable home loan in our database out of five.

This score is based on two main factors – cost and flexibility.

Cost is calculated by looking at the interest rates and fees over the first five years of the loan.

Flexibility is based on whether a loan offers features such as an offset account, redraw facility and extra repayments.

Real Time RatingsTM also includes the following assumptions:

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  • Loans are assumed to be principal and interest
  • Fixed-rate loans with terms greater than five years are still assessed on a five-year basis, so 10-year fixed loans are assessed as being only five years’ long.
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What fees are there when buying a house?

Buying a home comes with ‘hidden fees’ that should be factored in when considering how much the total cost of your new home will be. These can include stamp duty, title registration costs, building inspection fees, loan establishment fee, lenders mortgage insurance (LMI), legal fees and bank valuation costs.

Tip: you can calculate your stamp duty costs as well as LMI in Rate City mortgage repayments calculator

Some of these fees can be taken out of the mix, such as LMI, if you have a big enough deposit or by asking your lender to waive establishment fees for your loan. Even so, fees can run into the thousands of dollars on top of the purchase price.

Keep this in mind when deciding if you are ready to make the move in to the property market.

What is breach of contract?

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What is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.