Overhauling Sales Tactics
A major local bank has declared that they are overhauling their sales tactics. 3 changes will be made:
- A more ‘intrusive customer qualification process’
- A summary sheet that customers must affirm that they have read
- A cooling-off period
The chairman is adamant that the bank will turn away customers who are ‘not suitable by their books’. Not even a waiver of right to close investigation of financial affairs will do.
At the same time, sales targets will be kept as ‘there is not going to be an easy substitute for having quotas for salespeople for any kind of product’. Also, ‘cracking down on sales too hard could prove bad for Singapore as a financial centre, if financial innovation happens elsewhere’.
I certainly hope all these are not just hot air. But I am still skeptical it will work.
To have a ‘more intrusive qualification process’ would mean spending more time collecting information. Depending on how interested the RM or the client is in the ‘qualification process’, the information may not be a reliable indication of the client’s financial status at all.
Signing a summary sheet is the same as signing the fact-find form, clients can just sign blindly. The bank can have another tool in proving that the client has read all the documents and thus knew what are they in for. This move, at least to me, is clearly motivated by the accusations of banks not providing the necessary information in the Lehman-linked structured note saga.
A cooling-off period is certainly better than nothing. But the free look period for life insurance has been in place since 1990. Has it help much in prevent mis-selling?
If you have noticed, nothing has been said about the improving the financial products. In fact, the products were justified as even their own people bought them. If you look at it from another angle, it may mean that they even want to ‘mis-sell’ to their own people! These products are stuffs that transfer the risks from the Financial Institutions (FI) to the consumers while getting a lucrative payout in the process. Are these the ‘financial innovations’ that consumers want? Or are they what the FIs want?
The moves seem to be pushing more responsibility to consumers and covering the FI’s backend. As long as the client is rich enough, a lousy product may still be suitable. Anyway, the client has affirmed that they have read the necessary documents, never mind if they understand or not.
The senior management has admited that the RMs are just ‘salespeople’ who need to have quotas like just salespeople of any product. The private bankers have even publicly stated that ‘the days of product pushing are over for now’ at the 18th annual Private Banker International Wealth Management summit (The Straits Times, 7th Nov 2008 – Less hard selling, more sound advice). Would consumers care? Would they now treat them as ‘salespeople’ or ‘product pushers’? I don’t think so…
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Tags: Mis-selling
