The Financial Markets Authority published its thematic review on bank incentive structures. See media release.
This review was signalled in the Financial Market Authority’s (FMA) Annual Corporate Plan 2017/18, and aligns with our strategic priorities of Sales and advice, Conflicted conduct, and Governance and culture. This review also complements the Bank Conduct and Culture review1 of banks in New Zealand by the FMA and the Reserve Bank of New Zealand (RBNZ).
The purpose of this review was to understand and assess the design of banks’ incentives schemes for salespeople, and how related conflicts of interest are managed.
We found incentives of bank salespeople are highly sales focused, meaning there is a high risk of inappropriate sales practices occurring. Despite this, banks are not adequately monitoring and controlling this risk.