The Reserve Bank of Australia (RBA) missed a key issue when it advised banks to expect lower credit growth: banks’ propensity to push debt through employee sales targets, according to the Finance Sector Union (FSU).
The FSU’s acting national secretary, Rod Masson, said the RBA clearly had concerns about the high levels of personal debt, but it missed the problem that banks continued to push debt.
The FSU’s statement followed the release of the RBA’s biannual Financial Stability Review, which advised banks to accept changed market conditions. The review warned that attempts to sustain earlier rates of domestic credit growth could induce banks to take more risks.
Masson stated that volume-based sales targets, like Westpac’s ‘Deal a Day’ expectation, ran counter to the RBA’s advice.
“Bank workers who have their pay and job security tied to their ability to sell debt to consumers are under significant pressure to continue to provide credit to their customers, and the banks need to let up on them and relieve this pressure,” he said.
