Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Bank regulation needed to protect consumers

5 November 2018

Consumer NZ wants regulation of the banking industry to be strengthened to protect customers from being sold products they don’t need and that provide poor value. Consumer NZ chief executive Sue Chetwin said the joint review of the industry by the Reserve Bank and Financial Markets Authority showed banks were doing little to monitor whether products were suitable for their customers.

Released today, the review found the risk of customers being mis-sold products was increased by sales incentives offered to staff. Ms Chetwin backed the review’s call for banks to drop incentives tied to sales. “If they’re not going to remove them, they need to show how they can manage the inherent conflicts of interest these inducements create. We doubt they can.”

Regulation to address the “significant weaknesses” in banks’ governance and management of conduct risks is also needed, she said. “The review found many banks were relying on customer complaints to identify problems. But there were serious shortfalls with the complaints systems in some cases. The processes for whistle-blowers to come forward and raise issues were also poor.”

Failures in banks’ management of their processes had resulted in customers being charged interest or fees when they shouldn’t have been. Ms Chetwin said legislative gaps meant regulators weren’t doing the monitoring needed to assess banks’ conduct and give consumers confidence their interests were being protected. Consumer NZ supported recommendations to give regulators stronger monitoring powers and require banks to protect customer interests. “Banks are making record profits. Consumers need to know whether these profits are resulting from the sale of poor value products that may result in customers unnecessarily taking on debt.”

Ms Chetwin said Consumer NZ’s own survey research found one in four consumers had been offered unsolicited products by their bank. “In many cases, the consumer didn’t need or want the product, and you’ve got to question whether the only reason it was offered was because the sales rep had a target to meet.

“Sendsales incentives are not only inconsistent with banks' responsible lending obligations, they expose consumers to the risk they will be sold junk products.”

ends


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Climate Summary: NZ’s Equal-2nd Warmest Year On Record

Annual temperatures were above average (+0.51°C to +1.20°C above the annual average) across the majority of New Zealand... 2018 was the equal 2nd-warmest year on record for New Zealand, based on NIWA’s seven-station series which began in 1909. More>>

ALSO:

GDP: Economic Growth Dampens In The September Quarter

Gross domestic product (GDP) rose 0.3 percent in the September 2018 quarter, down from 1.0 percent in the previous quarter, Stats NZ said today... GDP per capita was flat in the September 2018 quarter, following an increase of 0.5 percent in the June 2018 quarter. More>>

ALSO:

Up $1.20: $17.70 Minimum Wage For 2019

Coalition Government signals how it will move toward its goal of a $20 p/h minimum wage by 2021... “Today we are announcing that the minimum wage will increase to $17.70 an hour on 1 April 2019." More>>

ALSO:

Retail: IKEA To Open In New Zealand

Inter IKEA Systems B.V. is today announcing its intentions to grant the Ingka Group exclusive rights to explore expansion opportunities in New Zealand. More>>