Banks face sales-pressure backlash

New Zealanders are being put at risk by bank staff who are being forced to flog loans and credit cards to meet their sales targets, the union representing them says.

First Union is launching its Service before Sales campaign in Wellington today, calling for the country’s big banks to implement a plan to end debt sales targets as soon as possible.

The campaign launch comes two months after the release of Australia’s Sedgwick Report, which recommended 21 changes to transform banking culture from ‘‘sales first’’ to ‘‘service first’’.

The major Australian banks, which own the big four in this country, agreed to adopt the report’s recommendations.

First Union said two New Zealand banks, ANZ and Westpac, had made commitments to do the same.

ANZ revealed on Friday it was changing its remuneration structure.

From October, 25-30 per cent of frontline staff’s bonuses will be determined by how much they sell. At the moment it is more than 50 per cent.

Union organiser Tali Williams said staff had reported feeling stressed by sales targets. ‘‘It’s so unrelenting, they feel pressure to sell products beyond what a customer needs.’’

Williams said that was also a concern for customers, who might take on debt they could not repay.

First Union surveyed employees at 40 ANZ branches and found 77 per cent felt pressured to sell beyond customers’ needs, about 10 percentage points higher than competitors.

Changes in the Financial Advisers Act will require banks not to remunerate staff in a way that does not put customers first.

But Williams said that although staff now had to ‘‘tick boxes’’ before recommending products to customers, they still had to shift the same number overall.

Life insurance was a key focus for banks at the moment, she said.

It was time New Zealand banks followed the rest of the world in reducing their focus on sales targets.

But banking expert Claire Matthews, from Massey University, said the campaign showed a lack of understanding about the relationship between customers and banks.

‘‘I think in some cases there will be substantial pressure on staff to sell products, but we need to remember that banks are profit-making entities and sales are what generate the profit. Would customers prefer to pay for the services that banks provide? I suggest that the answer to that question will almost invariably be no,’’ she said.

‘‘I don’t have a problem with consumers being asked if they have life insurance or Kiwisaver, because the consumer may not think about it until asked or may not understand the product.

‘‘And some consumers may keep putting off doing anything about it although they have identified a need for the product, and the question spurs them into taking action.’’