4 Comments 4 Commentsby Susan Edmunds
First Union has released new data from a survey of its members, which showed that 87% of staff felt pressure to sell financial products.
More than 90% said the pressure they were under was the same or greater than a year ago, despite banks pledging to respond to Australia's Sedgwick Report and alter their incentive structures.
Union organiser Stephen Parry said banks’ attempts to balance sales targets with softer, non-sales factors, had been ineffective.
He said while ANZ and Westpac had moved away from having set dollar amounts of product categories that staff had to sell, they were still working towards a target number of overall sales.
Many bank staff were required to use an in-house system that prompted them on which products, such as insurance, might be a good fit to sell to each customer.
He said the Financial Services Legislation Amendment Bill could have some benefit because it makes clear that customer interests should come first.
“Having such a general proposition in legislation isn’t necessarily going to flow through to actual change on the ground.”
The new law will require that staff aren’t remunerated in a way that encourages them not to give priority to client interests.
There had been minimal response to the FMA conduct guide, he said.
He said banks needed to remove sales targets as a way of measuring staff performance. “It creates fundamental conflict between consumer and bank.”
Conflict within vertically integrated organisations is something that has been of concern to unaligned financial advisers in recent years.
Some have suggested that the new regime does not go far enough to address the issues that arise when advisers are employed by a product provider.
Rod Severn, chief executive of the PAA, said work was needed to stop bank customers from thinking they were getting advice, when all they were getting was a sales pitch or information on a bank product.
It was also important to stop the staff from being financially incentivised to sell bank product.
"This puts undue and unwanted pressure on bank staff to pressure customers into buying product that might not be well suited to them. The whole issue here is one of conflict. VIOs should not be allowed to manufacture and sell their own products, hence the banks looking to exit the wealth management sector due to this very problem.”
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I have never in the long journey of regulatory reform seen the PAA arguing that banks and other VIOs should not be allowed to manufacture and sell their own product.
It's beyond belief!
I don't think any of the other adviser associations would support that view. I know SIFA would not.
At the same time I have never heard PAA advocate so clearly for a clear separation between sales and advice; tis a pity they hadn't supported the SIFA view much earlier which readers will recognise has been to stop the illusion of what the VIOs do most of the time which is to sell their own products under the cloak or disguise of advice. I always thought they were on the other side.