Across the Tasman, New Zealand banks have committed to removing sales incentives from their front lines.
Both the Reserve Bank of New Zealand (RBNZ) and the NZ Financial Market Authority (FMA) have announced that banks have submitted their plans to remove sales incentives from their front-line staff and from management.
“Our review highlighted concerns about sales incentives for front-line banking staff. Other banking jurisdictions are also focused on this issue, and the commitment to remove these incentives in New Zealand is a significant shift for banks,” FMA CEO Rob Everett said, in an official statement.
He added the FMA will continue to monitor banks against their plans.
However, not all incentives will be removed. Incentives for small selection staff who service business and the wholesale market will remain in place. Incentive roles not directly related to sales staff or their line of management will remain in place, as well.
The review on the impact of sales incentives in New Zealand-based banks came just after the conclusion of the Australian Royal Commission hearings into the Banking, Superannuation and Financial Services industry. It also followed the review into conduct by New Zealander regulators, that found 11 regulated entities were making insufficient effort to put their customers interests’ first.
“All the banks have now developed plans to address weaknesses in their systems. They reflect our findings that there is more work to do to embed conduct risk into these firms. The real test will be how the plans are executed, and it is board and senior management’s responsibility to ensure they deliver good customer outcomes,” RBNZ Governor Adrian Orr said.