For immediate release
Sunday, 11 May 2008
Bank staff call for major overhaul of unethical financial lending practices
The bank workers union Finsec, is calling for a major overhaul of finance industry lending practices and regulations in response to a report in today’s Sunday Star Times that shows customers support the curbing of unethical lending practices.
Finsec will shortly be releasing a report setting out the framework for an overhaul of the current regulatory system around lending. Recommendations will include establishing an industry wide fair and ethical lending code and setting up an independent watchdog to ensure the code is adhered to.
“A major overhaul of banks and other financial institutions lending practices and the regulation of lending needs to happen urgently. There is strong public support for change and there is no real defence for the unethical practices that many financial institutions have been engaging in,” said Finsec Campaigns Director Andrew Campbell.
“Changes also need to be made to banks pay systems that incentivise staff getting customers into debt. In most cases bonuses are linked to staff selling customers products like credit cards and in some case getting customers into debt is also linked to annual wage rises,”said Campbell.
“Staff can be disciplined and put on performance review if they do not meet their sales targets. The pressure to sell to customers is enormous and bank staff know it is bad for them and bad for customers and they don’t like it. That is why they want major changes to the current system, said Campbell.
“Driving bank customers into debt they can’t afford, is unethical and is bad for the economy as households get into debt stress they can’t handle,” said Campbell
“A two pronged attack is needed. We need to force banks and other finance institutions to behave in the best interests of customers and our economy through regulation. We also need an overhaul of employment practices, like having debt targets, too,” said Campbell.