Bank staff could be selling customers financial services they do not need to make their bonuses or receive commission.
An FMA investigation found sales incentive schemes for frontline bank staff could be at odds with the needs of customers. Photo: 123rf.com
Bank staff could be selling customers financial services they do not need to make their bonuses or receive commission.
An investigation by the Financial Markets Authority (FMA) found sales incentive schemes for frontline bank staff could be at odds with the needs of customers.
The regulator found bank staff were too focused on making a sale, while banks did not have adequate measures in place to detect whether staff were selling unnecessary products and services, like loans, credit cards, term deposits, insurance and investments, in order to achieve sales targets.
FMA director of regulation Liam Mason said the findings were disappointing and customers could be harmed.
"The controls that the banks have on these incentive schemes do not seem to be effective to mitigate conduct risk," he said.
The FMA's findings were based on information provided by nine banks, with follow-up interviews with employees at the largest five - ANZ, ASB, Westpac, BNZ, and KiwiBank.
Most bank staff could earn an extra $6000 on average in bonuses, however in one case a bank salesperson earned an extra $279,000 last year.
Sales incentives cost the collective of banks a total of $71 million annually.
Mr Mason said individual cases had not been identified because the problem was industry-wide.
"This was a chance really to take stock," he said.
The investigation followed the Banking Conduct and Culture review it carried out with the Reserve Bank, which found some instances of poor conduct by bank staff, but none of the widespread misconduct revealed in Australia, such as charging dead people fees and lying to regulators.
Banks had until March to report back to the FMA with their plan to remove sales incentives and protect customers from misconduct.
The changes had to be in place by September next year.
The country's largest bank, ANZ, as well as ASB, Westpac and BNZ, said in written statements, that they had removed all sales incentives for frontline staff earlier this year.
The FMA said banks recent changes did not go far enough.