The government’s plan to regulate financial conduct to protect consumers may be ‘A-Okay’ for the financial services industry, but First Union has urged caution on its other plan to deal with sales incentives.
This week, Commerce and Consumer Affairs Minister Kris Faafoi announced that the government will regulate financial conduct to produce fairer outcomes for insurance customers. It also plans on banning all target-based sales incentives as they “put profits ahead of people.”
Tali Williams, secretary for retail and finance at First Union, commended the government’s effort to improve consumer protection.
“We’re pleased to hear that the Minister recognises that financial sales targets for bank and insurance workers are unfair for customers and workers, and they ‘put profits ahead of people’,” Williams said.
“The Financial Markets Authority and Reserve Bank are right to be concerned that these targets pressure staff into the difficult position of up-selling services that customers may not need in order to meet profit-driven performance requirements.”
However, Williams warned that banks continue to use sales targets under different classifications.
“The Minister does need to be careful in dealing with these institutions when it comes to sales targets – we’ve already heard many reports that sales targets continue under other names, operating much the same as before, despite what the banks and insurance companies claim publicly,” Williams explained.
“Another important aspect is to ensure that regulators like the FMA are well-resourced enough to adequately monitor methodologies in these industries – often, that work falls to unions like ours, where members are seeing on-the-ground practices that jar with what banks are saying publicly.”
First Union is seeking an opportunity to offer its expertise to the minister while the legislation is still being drafted.
“Workers’ voices are crucial in getting good law that’s informed by contemporary practice in the industry. A commitment from banks is not enough on its own, and any law will need teeth to be credible,” Williams concluded.