Union for finance sector workers First Union has welcomed the news that the Financial Markets Authority (FMA) and Reserve Bank of New Zealand (RBNZ) are looking into the business practices of NZ banks, but is calling on the government to act further.
The union is urging the government to convene a full Royal Commission, mirroring development in Australia.
“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,” says National finance sector organizer Stephen Parry. “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.”
Parry said Kiwi 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,” he explained. “If a worker fails to sell enough products, they not only lose out on bonuses but ultimately risk being managed out of their jobs.”
He also said banking sales targets benefit neither bank workers, nor New Zealander's wallets. These targets create a conflict between the interests of consumers and of the bank, and consumers should be able to trust that their best interest comes first when accessing financial services.
“We strongly encourage the government to convene a Royal Commission or a similar enquiry into the New Zealand finance sector, and that the use of sales targets be included in the terms of reference,” says Parry. “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.”
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