The eleven banks examined in the Financial Markets Authority (FMA) and Reserve Bank of New Zealand’s (RBNZ) conduct and culture review have now provided their responses to individual feedback letters, and have “acted quickly” to address concerns.
The regulators published their Bank Incentives Structures review last November, where they instructed banks to remove sales-based incentives targets for both salespeople and managers before March 2019. They stated any bank that doesn’t comply with this request will be required to explain how their incentive programmes are in line with good customer outcomes.
“The regulators will now begin working through the responses provided by 11 NZ registered banks,” the FMA said.
“Based on the volume of the responses, at this stage the FMA and the Reserve Bank will not be making a substantive comment on the contents of these documents until they have been thoroughly reviewed.”
“We expect this process to take several weeks, bearing in mind the break for Easter. We will make a further statement when we have completed this process.”
Life insurers that were reviewed as part of the second stage of the conduct and culture review have until the end of June to provide their responses.
A number of banks including ANZ, Westpac and ASB had already removed frontline retail sales targets last August prior to the publication of the report, replacing them with a ‘scorecard’ approach that takes customer feedback, product knowledge and level of service into account alongside sales.
The report also instructed bank Boards to be proactive in identifying issues of conduct and culture, and to strengthen the processes that detect and manage these issues. They were also urged to educate staff on what good conduct culture looks like, and have strong mechanisms for staff to be able to report any activity that is not in line with that standard. The New Zealand Bankers’ Association says that all eleven banks involved have ‘acted quickly’ to address any issues identified by the regulators.
“While I cannot disclose the information in each work plan, I can confirm that all banks with sales incentives have committed to remove or address them for frontline salespeople and their managers,” chief executive Roger Beaumont said.
“The individual work plans for each bank have all been signed off at the highest level. That means there is buy-in from the very top of these financial institutions to make sure they’re meeting regulator and public expectations.”