28 Apr 2017

Banks poised to reform long criticised sales practices

From Nine To Noon, 9:09 am on 28 April 2017

Australian banks must make changes to put customers first and reduce the focus on controversial sales targets, lobby groups and unions on both sides of the Tasman are warning.

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Photo: composite

An independent report (PDF, 812KB) by former Australian Public Service commissioner Stephen Sedgwick has made 21 recommendations including shifting to a service-first approach rather than pushing sales targets.

It found current practices did not put customers first, and said staff were often under pressure to sell the banks' products - with their jobs perceived to be on the line if they did not.

The New Zealand banking market is dominated by Australian-owned banks like ANZ, ASB, Westpac and BNZ.

The Australian Bankers Association - a lobby group which represents 25 banks in Australia - commissioned the report and said it would support its recommendations.

First Union organiser Tali Williams told Nine to Noon it has campaigned for decades against the pressure of sales targets.

"There's no chance that they [staff] are going to go beyond target," she said.

"Our concern is the other end of it, which is the disincentive, which is that if people don't meet their sales targets they find themselves performance-managed, ridiculed, humiliated and sometimes even disciplined and losing their job.

"That's not to say that sales won't occur or shouldn't occur," she said.

"The pressure of sales targets and needing to achieve them - in order to be able to said to be doing their job right - is causing bank workers to feel pressured to mis-sell products."

She said banks in New Zealand should adopt all the Australian recommendations and the union would work with them to do so.

Massey University Business School banking expert Claire Matthews said she expected the reform would have an impact on banks here.

"Exactly what form those changes will take I think we have to wait and see.

"I suspect they won't in fact remove incentives completely, and I think the report actually doesn't say that they have to be removed - but they will be changed and given less importance and combined with other things in terms of managing staff performance."

Dr Matthews said substantial change would be needed to change the industry culture.


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