Union calls for Royal Commission into New Zealand banking practices
FIRST Union, the Union for finance sector workers, welcomes news that the Financial Markets Authority and the Reserve Bank are looking into the business practices of New Zealand’s banks. The Union calls on the Government to go further, however, and convene a full Royal Commission mirroring developments in Australia.
Stephen Parry, National Finance Sector Organiser, says the investigation into Australian banks has revealed troubling activity for consumers and the economy: “The Australian Banking Royal Commission has seen concerning revelations come to light about the culture and practices of the ‘Big Four’ Australian banks, which are the parent companies of ANZ, ASB, BNZ and Westpac in New Zealand. A similar enquiry in New Zealand is necessary for the public to be assured that our Banks are not engaging in the same behaviour as their Australian parents”.
Mr Parry says workers in the finance sector are under pressure to make sales, and that this pressure is not always consistent with the interests of consumers.
“As the Union for the finance sector, the single biggest complaint from our members is the pressure to sell financial products (such as life insurance, credit cards or mortgages) in order to meet their targets. If a worker fails to sell enough products, they not only lose out on bonuses but ultimately risk being managed out of their jobs. For every 10 workers who are formally disciplined for failing to meet sales targets, there will be another hundred workers whose targets are being scrutinised on a less formal basis. The result is a culture of sales pressure within the Banks.”
Mr Parry says union members often report feeling ethically uncomfortable with the pressure to maximise sales.
“Banking sales targets are not good for bank workers, or New Zealanders’ wallets. Our members regularly report feeling stressed as a result of high sales targets, as well as being uncomfortable about having to offer products which consumers do not necessarily need or want. Sales targets also create a conflict between the interests of the consumers and the interests of the Bank. Consumers should be able to trust that their best interests come first when accessing financial services.”
“The Union has been raising the issue of sales targets with the Banks for years, and until recently we have been knocking on a closed door. Last year, however, we saw some changes after campaigning for around an independent Australian report that preceded the current Banking Royal Commission. This document, called the ‘Sedgwick Report’, was commissioned by the Australian Bankers Association in an attempt to blunt public pressure in Australia for a full Royal Commission. The Report was, however, independent and its conclusions were highly critical of sales practices within Australian Banks. In New Zealand, ANZ, ASB, BNZ and Westpac have all since made varying degrees of commitment to the recommendations of the Sedgwick Report”.
“While the recommendations of the Sedgwick Report are a good start, they do not go far enough and are not binding. In particular, the report stops short of recommending removing sales targets altogether. As a Union, our position is that sales targets have no place in the banking sector.”
“We strongly encourage the Government to convene a Royal Commission or a similar inquiry into the New Zealand finance sector, and that the use of sales targets be included in the terms of reference. A Royal Commission would give the public confidence that the interests of consumers and finance sector workers are properly balanced against the profit motive of New Zealand’s private sector banks, particularly in light of the indiscretions of their parent companies in Australia.”