Australian banks risk being embroiled in misconduct such as the fake bank account scandal that hit Wells Fargo unless sales targets for frontline staff are reformed, says a whistleblower from the US bank.
Kilian Colin, a former Wells Fargo banker, played a key role in exposing the scandal in which millions of fake accounts were opened by staff who were trying to meet aggressive sales targets.
The affair led to a $US185 million in fines for the US banking giant, and it last year cost chief executive John Stumpf his job.
In an interview with BusinessDay, Mr Colin highlighted the devastating personal toll of a sales-driven culture in which staff were told to sell up to 20 products a day, and the risks it created for customers.
It comes after banks in April promised to overhaul bonuses paid to staff who hit sales targets, but critics including the Finance Sector Union are pushing for tougher action and less emphasis on financial goals.
Mr Colin, whose trip to Australia was funded by a union group affiliated with the Finance Sector Union, predicted there was “absolutely” a risk of a similar scandal to the Wells Fargo affair in Australia, because of the pressure sales targets put on staff. He will appear before a Senate inquiry into consumer protection in finance in Sydney on Wednesday.
“We’re human. When we are under pressure and we don’t want to lose our jobs, of course we are going to go another way around, just to meet our goals and to save our jobs,” he said.
“If you don’t fix your sales goals systems here in Australia, I’ll see another similar to Wells Fargo scandal happening here in the future. I hope you guys can avoid it with some hard work, but we’re living in a very global world now, and things are pretty similar between us.”
Although Australian banks typically have lower levels of “cross-selling” than Wells Fargo did, before the scandal at the US bank some local bankers here including Westpac’s Brian Hartzer have previously looked up to Wells, one of the largest banks in the US.
The Australian Securities and Investments Commission late last year also ordered the big four banks to review whether any staff had engaged in similar misconduct to those at Wells.
Mr Colin said that during his time at a branch in San Diego, staff working alongside him would seek to sell unnecessary products “on an hourly basis”.
“It was just normal, when a customer sat at your desk, when they just needed a chequing account, but they ended up with chequing, savings, online banking, credit card maybe, maybe insurance. But they don’t necessarily need everything,” he said.
Mr Colin also said the relentless pressure to hit targets also had a damaging effect on his health, leading to skipping of lunch breaks, insomnia, and eventually, depression. The final trigger that caused him to blow the whistle came when he overdosed on sleeping pills in an attempt to end his own life.
“When I woke up and I recovered eventually, I decided that I would have to put an end to that drama at Wells Fargo, and that’s when I started becoming a whistleblower,” he said.
From late 2014, he was involved in public and private campaigning against the effect of sales targets, all the while remaining a Wells employee until mid last year.
He now campaigns for the Committee for Better Banks, a coalition of bank workers, unions and community organisations that is pushing for reform of sales targets.
After a series of scandals and heavy political pressure, Australian banks have already scaled back the role of such targets. All of the big four also committed to overhaul bonus structures, as a result of the review of retail banker remuneration by Stephen Sedgwick.
But FSU national secretary Julia Angrisano said the union wanted a government body to oversee this process rather than leaving it in the hands of the industry, and there needed to be a greater focus on rewarding staff who helped customers.
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Article Source: The Sydney Morning Herald