Concerns about sales culture in NZ banks

Concerns about sales culture in NZ banks
Photo credit: Newshub.

Bank customers are being sold products they don't need and don't want - and it's taking a toll on the front-line staff in banks, politicians have heard at a briefing in Parliament.

Consumer NZ told the Finance and Expenditure Select Committee it's concerned about people being sold unsolicited financial products like insurance and credit.

Consumer NZ chief executive Sue Chetwin used the example of a 25-year-old man who was enquiring about Kiwisaver walking out of a New Zealand bank with life insurance.

With "no mortgage, no dependants, why was he sold life insurance?" she asked. "Any competent financial adviser would not have sold him that product."

Consumer NZ called for more scrutiny of New Zealand banks.

The submission was slammed by ACT leader David Seymour, who said the evidence was "pitiful".

"They showed a few people they knew of anecdotally had been sold insurance they didn't need and, with some exacerbation, revealed the predictable news that banks try to upsell their customers extra products," Mr Seymour said.

The briefing was in response to a highly publicised Royal Commission into banking practices in Australia. Australia's inquiry found customers were billed for services they didn't get and dead clients were charged.

The Commission was prompted after concerns were raised about the sales-driven culture in banks.

Most of New Zealand's large banks are Australian-owned, which prompted questions over whether the same practices are happening here.

It appears there's little evidence New Zealand has problems to the extent seen in Australia, the Banking Ombudsman told the Committee. "Our caseload suggests none of the systemic abuses of the sort seen in Australia here," the Ombudsman said.

"That's not to say it doesn't happen and it's dealt with by the bank".

But First Union's Stephen Parry said sales targets are a source of stress and anxiety for the 3000 bank sector employees it represents.

Employees "feel uncomfortable having to push products consumers neither need or want," Mr Parry said. High sales targets result in "stress and anxiety - it is very real," he said.

Mr Parry called for the removal of sales targets in the banking sector.

"We are all vulnerable consumers as far as banks are concerned. We simply don't have the knowledge… to make informed decisions."