Aussie banks pay $7.3m in bonuses to employees
Banks are paying bonuses to staff as they struggle to keep up with demand and profit margins in the retail industry, despite being among the largest lenders in the world.
Key points:More than 100 payday lenders are being investigated by the Australian Competition and Consumer Commission (ACCC)The banks are offering bonuses ranging from $100,000 to $250,000The Australian Competition Commission is investigating more than 100 Australian payday loan lenders, including several owned by banks,The ACCC says it will investigate the firms if the banks are found to be breaching the Competition and Marketing Act.
The Australian Financial Services Commission is also looking into more than 200 Australian payday lending companies.
The ACCCC said it is investigating the companies on two fronts.
The first is that payday lending businesses are being singled out by the ACCC for enforcement action because they are using high-pressure marketing techniques to entice customers.
“While the ACCc is aware of some examples of marketing techniques used by payday lending providers, these examples are relatively few and are not representative of all payday lending operations in Australia,” it said in a statement.
The second is that the banks have been giving bonuses to their staff based on performance.
It said the bank bonuses were based on three factors: customer satisfaction, cash flow and profitability.
The commission is looking into a range of other payday loan practices, including cash advance promotions, and whether some banks are breaking the law.
“These practices may involve a high level of pressure and a willingness to pressure borrowers to repay their loans, but they do not appear to fall within the definition of deceptive marketing,” the ACCCC statement said.
The banks, which include Bank of America, the Commonwealth Bank, Macquarie Bank, Westpac and ANZ, are among a number of banks that have been hit by an industrywide crackdown on payday lending.
The industrywide clampdown is targeting payday lenders who advertise that they are a high-end financial service for borrowers in the areas of credit, loans, mortgages and payday loans.
The crackdown has also hit online businesses, particularly the payday lending websites, and many people are relying on the online services to make payments.
More than 130 Australian payday lenders have been shut down since August, according to the ACC, with the majority of those being operated by a handful of companies.
In August, the ACCS issued a warning to lenders about the “toxic environment” in which they were operating, which prompted some of the lenders to close.
However, the industry is continuing to flourish despite the crackdown.
“The ACCS will continue to monitor these issues and take further enforcement action as they come to light,” a spokesman for the ACC said.