INDEPENDENT NEWS

Bank regulation needed to protect consumers

Published: Mon 5 Nov 2018 02:43 PM
5 November 2018
Consumer NZ wants regulation of the banking industry to be strengthened to protect customers from being sold products they don’t need and that provide poor value. Consumer NZ chief executive Sue Chetwin said the joint review of the industry by the Reserve Bank and Financial Markets Authority showed banks were doing little to monitor whether products were suitable for their customers.
Released today, the review found the risk of customers being mis-sold products was increased by sales incentives offered to staff. Ms Chetwin backed the review’s call for banks to drop incentives tied to sales. “If they’re not going to remove them, they need to show how they can manage the inherent conflicts of interest these inducements create. We doubt they can.”
Regulation to address the “significant weaknesses” in banks’ governance and management of conduct risks is also needed, she said. “The review found many banks were relying on customer complaints to identify problems. But there were serious shortfalls with the complaints systems in some cases. The processes for whistle-blowers to come forward and raise issues were also poor.”
Failures in banks’ management of their processes had resulted in customers being charged interest or fees when they shouldn’t have been. Ms Chetwin said legislative gaps meant regulators weren’t doing the monitoring needed to assess banks’ conduct and give consumers confidence their interests were being protected. Consumer NZ supported recommendations to give regulators stronger monitoring powers and require banks to protect customer interests. “Banks are making record profits. Consumers need to know whether these profits are resulting from the sale of poor value products that may result in customers unnecessarily taking on debt.”
Ms Chetwin said Consumer NZ’s own survey research found one in four consumers had been offered unsolicited products by their bank. “In many cases, the consumer didn’t need or want the product, and you’ve got to question whether the only reason it was offered was because the sales rep had a target to meet.
“Sendsales incentives are not only inconsistent with banks' responsible lending obligations, they expose consumers to the risk they will be sold junk products.”
ends

Next in Business, Science, and Tech

Surge funding for kauri dieback and myrtle rust research
By: New Zealand Government
Spark sets 5G launch date, but without any 5G spectrum
By: BusinessDesk
Commerce Commission to appeal Steel & Tube sentence
By: Commerce Commission
Rapid rent increases a product of bipartisan inaction
By: Auckland Action Against Poverty
Turning the Tide in the Battle Against Kauri Dieback
By: New Zealand First Party
Kauri dieback and myrtle rust research to be accelerated
By: Biological Heritage National Science Challenge
New Hope for Kauri Dieback Research Programme
By: The Tree Council Inc
Emirates Team NZ To Use Spark’s 5G Network In Cup Defence
By: Spark
Rents on the rise as Govt hurts low-income families
By: New Zealand National Party
Rental Market Statistics: October Report
By: Oxygen
Indirect payment of letting fees may be unintended outcome
By: NZ Property Investors Federation
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media