http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=390355&re=8921&ea=138574
Bank staff mis-selling to be scrutinized under government plans
By Victoria Bischoff 25 March 2010
Financial services firms that force staff to promote and sell products to consumers in order to meet sales targets will be reformed, under plans revealed in the budget this week.
The government has said it will set up a ‘working group’ to consider how staff targets and incentives might lead to poor outcomes for consumers and employees.
This is building on the Retail Financial Services Forum’s remit to make financial services work better for consumers. The group will meet with a number of banks, consumer groups and trade unions, to discuss the need for reform, before reporting to the Chancellor in time for the Pre-Budget Report.
Unite Union has welcomed this investigation into bank sales culture, describing it as a ‘victory’ for staff in banks across the UK.
Rob MacGregor, Unite national officer said: ‘There is now an opportunity to eradicate the murky practices which put pressure on staff and customers. This new examination by the Government is a win for consumers and a win for those workers on the front line of the banking sector.’
‘Unite members feel uncomfortable with having to pressure customers to invest in products which they often don’t feel they need, simply because the staff have to meet unreasonable sales targets,’ he added.
Consumer champion Which? recently sent out mystery consumers to 37 branches of banks and building societies, and found just four gave consumers good advice to consumers investing a lump sum. Meanwhile, the remaining 33 banks often recommended inappropriate products, failed to properly explain the risks or simply couldn’t get the basics of good advice right.
Which? chief executive, Peter Vicary-Smith, said: ‘Banks and building societies need to buck up their ideas and make sure that their sales practices don’t exploit consumers by encouraging their staff to recommend inappropriate products’.
A spokesperson for the British Banker’s Association said they are not currently aware of any invitation to the new group on remuneration and incentives, but they will be pleased to participate if asked.
You won't get this here.Regulator better off?
ReplyDeleteThe UK govt's move is smart. They correctly identified that the policies and systems imposed (commissions, targets, sales quotas, etc.) by senior management are the real culprit for mis-selling, rather than targeting frontline staff. So what if you target the bank teller, she just switch job lor.
ReplyDeleteI still remember the uneasy feeling I had a feel years ago, when I learnt about Koh Boon Hwee (the DBS chairman) boasting to analysts about how he managed to increase DBS' % of risk-free (for he bank only) fee income (mainly fees/ commissions from selling complex structured products to grannies). And how he managed to reduce % of interest income (from lending to businesses to create jobs).
I think parliament should set a law mandating all employees/ agents/ marketing contractors of banks and insurers be paid a decent basic salary (instead of depending on commissions). This is especially if the bank/ insurer wants to participate in the CPFIS. This will make banks and insurers more discerning in recruiting staff, and not indiscrimately recruit and flood the market with agents, or operate pyramid selling schemes. This will also hold the bank/insurer more responsible for mis-selling, rather than them shifting the blame to their agents/ contractors, when everyone knows that they are the real masterminds.
If you ever attended a recruitment business promotion talk by insurance companies the first thing they dangle before the wannabees is get rich quick opportunities , eg , earn $100K in the first year...we teach you how.
ReplyDeleteIt is wrong from the start. There is no mention at all about financial planning to meet the needs and clients' interest first.So the talk attracted the wrong people with conman mindset.
The companies continue to reinforce this during training..eg..shortcuts to the sales process....don't tell so much... clients don't ask don't tell....close by emotion...hit the hot buttons...close as many cases with one fact find form...etc..
Aren't they get rich quick ploys?
Is it a surprise that insurance agents have a criminal mind? No, they already came in or shortlisted with that kind of personality and mind , to fleece or con their customers and that is the goal.