Banks’ conduct, culture ‘patchy’

WELLINGTON: The Financial Markets Authority has found the conduct and culture of New Zealand’s banks to be ‘‘patchy’’.

The FMA and the Reserve Bank is reviewing New Zealand banks’ behaviour at present against the backdrop of the inquiry into the Australian banking sector, which revealed unethical and illegal behaviour.

The regulators have made spot visits, spoken to frontline retail staff and visited small banks in regions, in addition to the written material it asked the main banks to provide.

FMA chief executive Rob Everett said it had found what it expected.

‘‘The extent and understanding of financial services firms as to what’s required and how to achieve it, in terms of how to treat your customers well and how to set yourselves up to do that, I’m going to politely describe it as patchy.’’

It will report its initial findings from the review in October.

Mr Everett said he was ‘‘sceptical’’ and concerned about the ‘‘very low’’ number of complaints it received, and the lack of avenues for whistleblowers might be a factor.

‘‘That may reflect a cultural willingness to put up with bad stuff without complaining about it,’’ he said.

Mr Everett said the review had increased collaboration between regulators, although they were still working through the various responsibilities.

‘‘There’s quite a lot of players in this space and it can sometimes be really hard to work out where [a case] sits,’’ Mr Everett said.

‘‘We have to make sure that with the Commerce Commission and Serious Fraud Office, a whole bunch of agencies, that we don’t just let things slip because we’ve handed it on to someone else.’’

The FMA has released its annual corporate plan, detailing what its work priorities will be for the coming year.

It said it planned to investigate more market abuse, nondisclosure, money laundering conduct and scams.

Mr Everett said the FMA would become more ‘‘muscular’’ and exercise enforcement powers it had other than prosecution, because court proceedings were timeconsuming and resourceheavy. — RNZ

WELLINGTON: ANZ bank has announced it is removing sales targets for frontline staff, and the country’s other major banks look set to follow suit.

One ANZ employee, who asked not to be identified, said there was a sense of relief in his office when it was announced they no longer had to meet strict sales quotas.

‘‘It will be a much less stressful place to work without those continuing product sales pressures.’’

In the past, any ANZ staff bonuses were entirely based on meeting sales targets, but over the years this was reduced to 25%.

The employee said staff felt pressure to meet targets, which could conflict with customers’ best interests.

‘‘Some of my colleagues did feel the pressure of having to meet those required sales targets and as such did feel a lot of stress.’’

The financial services industry has come under fire recently.

Some workers said they felt pressured to sell customers services they did not need.

First Union, which represents the majority of the sector’s members, believes ANZ’s decision could create a cultural shift in banking.

Union finance sector organiser Stephen Parry said sales targets had been the most consistently raised and deeply felt concern for union members.

‘‘So what we’re seeing is, I think, the beginning of the end for sales culture in the New Zealand banking sector and that’s a really promising thing.’’

Given the negative attention the sales tactics have received lately, Mr Parry believes other banks have taken note of ANZ’s move.

‘‘They’d do well to follow ANZ’s lead on this,’’ he said.

Kiwibank people group manager Danielle George said it wants to go even further than ANZ.

‘‘What we’re looking at at Kiwibank is how do we incentivise and recog nise not just the frontline — so not just the sales piece — but the entire organisation from front to back.’’

Westpac said in a statement it had already made changes to the way frontline staff were incentivised and further changes were planned.

BNZ said it was also conducting a review.

ASB said it had made changes to what it called its performance management framework over the past year, including removing individual sales targets for branch staff.

It said more changes were planned. Financial Markets Authority head of regulation Liam Mason said ANZ’s move was positive, but the regulator wanted banks to remove sales targets for external advisers, too.

‘‘We’ve been asking financial firms to act to improve customer outcomes for some time.

‘‘Removing incentives that can conflict with that can only help this. It’s a good step from them.’’

The FMA has been reviewing banking practices in light of seamy practices and customer exploitation in the Australian banking sector, which is the subject of a royal commission of inquiry. — RNZ

❛ So what we’re seeing is, I think, the beginning of the end for sales culture in the New Zealand banking sector