Amid ongoing activity around the FMA-Reserve Bank review of banks' conduct and culture, a Consumer NZ survey finds one in five bank customers being offered products they didn't request

Amid ongoing activity around the FMA-Reserve Bank review of banks' conduct and culture, a Consumer NZ survey finds one in five bank customers being offered products they didn't request
The FMA's Rob Everett & RBNZ's Adrian Orr probe banks. By Jacky Carpenter.

A banking survey conducted by Consumer NZ has found one in five customers were pushed financial products by their banks that they hadn't requested.

Credit cards, increases in credit card limits, life insurance and personal loans were the most common products promoted to customers.  Consumer NZ head of research Jessica Wilson said the majority of people who got these offers didn’t think the product was a good option or suited their needs.

“Seven out of 10 consumers who were offered a new credit card or an increase in their card limit didn’t think it was a good choice for them,” she said. 

The findings in what is an annual survey (this one conducted in February) are of particular relevance this year as they come amid the ongoing activity around a Financial Markets Authority-Reserve Bank review of banks' conduct and culture.

“Banks have attracted a lot of bad press in the past 12 months for their selling practices and we would have expected to see a change in behaviour. However, our survey results don’t give us any confidence that’s happening,” Wilson said. 

The FMA-RBNZ review, released in November, was conducted following the Royal Commission in Australia, which revealed a number of issues around banking conduct and culture across the Tasman. 

The New Zealand review didn't find the same extent of issues in this country, but individual banks received specific detailed responses, and were requested to develop a plan to address the feedback, and report their progress to the regulators by the end of March. The Reserve Bank (RBNZ) and Financial Markets Authority (FMA)  report concluded bank conduct and culture problems were not widespread in New Zealand, but it did highlight a culture of banks acting in their own, not customers', interests. Banks have also been asked to remove pay incentives linked to sales

The RBNZ and the FMA confirmed earlier this month that all 11 banks involved had provided their responses to individual feedback letters and the regulators were working through them and will be making a further statement once the process has been completed.

Given the results in the latest Consumer survey, it will be interesting to see what comes out. 

The survey was a "nationally representative" on of 2118 New Zealanders, aged 18 and over, carried out in February 2019. Satisfaction ratings showed the proportion of respondents who scored their bank 8, 9 or 10 on a scale from 0 (very dissatisfied) to 10 (very satisfied). Ratings were for banks that had 30 or more responses.

The survey found 16% of customers had felt pressured by bank staff into buying a financial product they didn’t need. 

Wilson said pressure selling by banks was a major concern, given it could lead to consumers unnecessarily going into debt or being sold a poor-value product. 

The survey also found just 47% of consumers thought banks could be trusted while 68% felt profits in the industry showed banks were charging too much. 

Customer satisfaction remained unchanged. 

“Overall, 60% were happy with the service they were getting from their bank, on par with our 2018 survey,” Wilson said. 

The Co-operative Bank and TSB Bank rated above average with scores of 87% and 83% respectively. Both were Consumer NZ’s “People’s Choice” winners in this year’s survey. 

In comparison, ASB (55%) and ANZ (54%) rated below average for customer satisfaction as well as for their product advice, fees and value for money.

Satisfaction scores 

  • The Co-operative Bank: 87%
  • TSB Bank: 83%
  • Kiwibank: 66%
  • BNZ: 63%
  • Westpac: 60%
  • ASB: 55%
  • ANZ: 54%

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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16 Comments

Banks are just like any other business. To meet incremental sales and profit margins, they either have to sell more volume or increase the number of lending "occasions." It doesn't surprise me in the least that their behavior has only been partially modified. However, they really need to think about their business privilege. What other industry has the same opportunity to create their product out of thin air; has implicit guarantess from the taxpayer; and has public institutions manipulating their target consumers' behavior? The only way they can really deliver is by cutting their costs or moving into new business streams. The former means probably closing branches and getting rid of people, while the latter is a bit more difficult as fintech has pretty much covered most of the bases in terms of innovation.

.. welcome to the 21'st century ... we're constantly being bombarded with offers of things we don't want or don't need ... from cold callers on the phone ... door knockers wanting to see our latest electricity bill 'cos their company is cheaper ... online spam ...

Why would anyone think the banks are any different from any other business ...

... man up and just say ( politely but firmly ) " No thanks , goodbye ! " ..

.. welcome to the 21'st century ... we're constantly being bombarded with offers of things we don't want or don't need ... from cold callers on the phone ... door knockers wanting to see our latest electricity bill 'cos their company is cheaper ... online spam ...

Why would anyone think the banks are any different from any other business ...

... man up and just say ( politely but firmly ) " No thanks , goodbye ! " ..

( see what I did there ... gave you 2 posts for the price of one ! ... bargain of the day ... )

Indeed. Getting an offer to increase your overdraft or credit card limit is ego-enhancing when you're younger. "Look dear, the nice man from the bank has increased our credit card limit to $65,000. He must like us!"
I applied for a mortgage recently way beyond my comfort zone, which the nice man at the bank approved in just over a week. I haven't had the balls to spend it yet, mainly because I'm too old to have a multi-million dollar mortgage, but my ego was stroked through the process, even if reality sucks in the end.

Pre-approved to increase automatically. But if you want to reduce your limit well good luck!!!!

Do they still do that? I know they used to, but I thought that got knocked on the head about 8 years ago?

Nope. Check this out, I just logged in tonight:

I've blanked out our personal balance details, effectively we're prompted to increase our limit as soon as I log in:
http://iforce.co.nz/i/ptkbrcuz.y1z.png

If i want to increase my limit, I can easily slide the bar up another 25%.
http://iforce.co.nz/i/wtratzbn.1qu.png

If i want to decrease my limit, I must phone :( (as seen at the bottom of the screenshot, I left the "increase limit" portion for context.
http://iforce.co.nz/i/04tabyac.cdu.png

Why can I not decrease my limit at any time on the internet? What the fuck is going on

Ah okay, not quite what I was meaning. I remember getting the letter in the mail back when I was a bit younger, "Congratulations, you've been approved for a limit increase to $x, if you don't call before (date) we'll automatically increase your limit to $x."
Yes, they actually used to do that. I think it was National Bank back when they were still around.

Oh nah now I see what you're saying, increasing someone's limit without their expressed permission. Yeah that's dodgy.

I still think it's dodgy that I cannot just log into to my Credit Card and drop the balance to what I think suits our expenses, but the company can look at my payment history and pre-approve me no sweat. Yeah, maybe I'm lazy, but if I can log in and increase my limit no dramas then surely a decrease in limit requires no further approval? Unless of course the bank wants me to push the limits so they can claim "penalties" for my stupidity.

My Bank allows me to increase and decrease limits to my hearts content all online, no need to call. Splits between cards too, in case you want a low no-fee one to use for internet purchases etc. Can pause cards if I lose, can pay through my fitbit or my iphone. But, some banks are pretty backwards for online banking, like it's an afterthought.

I have to say though, yes I remember those letters. I remember as a student, being able to sign up for a National Bank credit card online, they deliver your card. You just take the card into your nearest branch, sign it and it's all yours to use.

The aggressive marketing from GE finance always really bothered me. “Have $10,000....”. Made me want to borrow it even though I had $10,000.

Banks are a business and the RBNZ and FMA are idealistic fools
Can you imagine Don Brash or Graham Wheeler getting involved in this trivia
But then Wheeler and Brash weren’t show pony’s who loved the camera

Lindsay,

Call me pedantic,but I find it hard to take anyone seriously who doesn't know that the plural of pony is ponies,NOT pony's.

Banks are indeed businesses,but their role in society is such that they should meet high standards of social accountability. That they have all too often failed to do so has been laid bare in Australia,in the UK and elsewhere. If you want to know more,just read Bad Banks by Alex Brunner.

Mother in-law got “talked”into signing an insurance policy while she only wanted to sort out some banking just the other day...
Told her to cancel straight away as it is so ridiculously unaffordable!

I guess the devil might be in the detail. Depends what they were being offered... for example, if it was insurance, I dont know if that's a bad idea. NZers are terribly under-insured. I guess the 'she'll be right' attitude. Like all those people who dont insure but want the Government or someone else to pay them when an earthquake/flood/fire/godzilla destroys their property.

I have friends who have increased their obligations via mortgages etc but dont think to increase their life insurance or income protection etc in order to save a few bucks.