Bank customer risk strategies not enough: Sedgwick

The Sedgwick Retail Banking Remuneration Review, released this week, looked at the current systems, processes and features that banks report they have in place, which are intended to reduce any risk of poor customer outcomes inherent in the design of bank remuneration structures.

The report found important issues “that may warrant further investigation” and illustrated particular examples of banks’ practices.

For example, non-financial staff performance measures used by banks to “mitigate the risk of inappropriate behaviour or mis-selling”, can actually “incentivise activities that are not necessarily in the best interests of customers”.

The report found that some banks measure tellers and managers on the number of customers who are told to complete a transaction via self-service channels rather than via the teller.

“Part of my behaviour metric in my scorecard is that 60 per cent of my customers need to walk out working (leaving branch with work to do). If they don’t I am not giving the customer the tools to use digital banking – my behaviour has not given customer service,” one survey participant said.

The report, however, states that for some customers, such an approach may not be in their best interests.

“Indeed, one teller described this as a ‘self service industry’ not a customer service one,” the report said.

Another survey participant said, “One teller encouraged a customer to open nine separate accounts, which helped the branch meet its target for new accounts opened.

“Subsequently, after discussions with another teller, the customer closed the unnecessary eight accounts. The second teller was reprimanded.”

The report raised further concerns with other current performance measures implemented by banks in order to mitigate the risk of poor customer outcomes.

“A strong and deeply embedded sales culture ... is difficult to change quickly. Attempts to do so need to be sustained, credible and possibly dramatic to have an ongoing effect,” the report said.

The review encourages submissions, which can be lodged by 10 February.