9th March 2007

Banks fuel inflation with customer debt targets

Finsec, the bank workers union is backing calls by the Reserve Bank Governor to look at how New Zealand banks lend as part of its consideration of ways of limiting inflation. “Some major banks lending practices have changed dramatically over recent times and now require staff to sell debt to customers in order to achieve pay increases and bonuses. It is our view these practices are not in the best interests of customers or the New Zealand economy” said Finsec General Secretary Andrew Casidy.

“Major banks are driving inflation and attempting to grow their market share by imposing ever increasing sales targets on staff. Banks often compel staff to sell or ‘upsell’ products to customers. Customer service can be sacrificed for sales as targets are incrementally raised to cover understaffing and grow the banks’ market share.”

“When the ‘sale’ of a credit card gets more recognition than the ‘sale’ of a savings product and when borrowing 100% of the cost of a house is possible despite the general recognition that house prices are overvalued, it is clear that the interests of the Bank’s are being placed above the interests of customers and the New Zealand economy,” Casidy said.

“Banks say they want to be good corporate citizens. If they do, they must look closely at their lending practices and eliminate targets that encourage people to commit to debt they cannot afford,” he said.

ENDS

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