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10-01-13, 15:12
HSBC scraps sales commission for some bankers here
by Teo Xuanwei
04:45 AM Jan 10, 2013
SINGAPORE - In what is a bold move in the banking industry, HSBC has become the first bank here to scrap sales commission for some of its bankers, switching to paying out bonuses for good quality customer service instead.
Only sales staff in HSBC's premier banking arm - those serving customers with assets under management exceeding S$200,000 - both here and abroad are affected by the change that kicked in at the start of the year, sources told TODAY, although it could be extended to mass market relationship managers as early as next year.
Under the change, which was announced by HSBC Singapore's Head of Retail Banking and Wealth Management Paul Arrowsmith to premier bankers early last month, bankers compete for bonuses on the quality of their service, such as how well they can propose and implement solutions to meet customers' financial needs, insiders revealed.
There are no sales targets to meet, sources added, which means one's sales performance has no bearing on his bonus.
Asked to confirm the change to its remuneration model, a HSBC spokesperson said: "We want to build long-term and sustainable relationships with our clients. In order to ensure that we continue to meet our clients' needs, we are actively reviewing how we reward our wealth sales teams."
A sales commission remuneration model - in other words, "sell more, earn more" - is de rigueur for banks around the world because it is seen as the most effective incentive to boost sales volume.
However, there have been calls for sales commissions to be abolished since the Lehman Brothers' collapse in 2008 and, most recently, in the wake of mis-selling scandals in the United Kingdom involving personal pensions, endowment policies and payment protection insurance.
In October, Barclays, the world's fourth-largest bank in terms of total assets, did away with commissions for its 18,000 employees in High Street branches and call centres, opting for bonus payouts based on giving customers good quality service.
One affected HSBC staff member, who spoke on condition of anonymity, said: "It's quite a major change and we're still quite uncertain as to how our performance will equate to our incentives. But the top performers will probably not be earning as much as they used to."
But they also recognised benefits of the change for consumers. Said one banker: "There's no pressure to sell, so the emphasis is on the process. I think bankers will definitely try to reach out to more clients and get to know their needs better."
A check by TODAY has shown that no other banks here are embarking on similar changes to their remuneration models, although factors like poor customer service and compliance lapses, for instance, do affect whether one gets the full commission. At Standard Chartered, for instance, "service quality, compliance and assets under management" affect Relationship Managers' commission. Professional certification and continual professional development are also considered.
According to sources, these account for 30 per cent of sales staff's key performance indicators (KPIs).
DBS also includes non-sales KPIs, such as the quality of advisory and sales process, suitability of product recommendation and customer satisfaction, according to a spokesperson.
by Teo Xuanwei
04:45 AM Jan 10, 2013
SINGAPORE - In what is a bold move in the banking industry, HSBC has become the first bank here to scrap sales commission for some of its bankers, switching to paying out bonuses for good quality customer service instead.
Only sales staff in HSBC's premier banking arm - those serving customers with assets under management exceeding S$200,000 - both here and abroad are affected by the change that kicked in at the start of the year, sources told TODAY, although it could be extended to mass market relationship managers as early as next year.
Under the change, which was announced by HSBC Singapore's Head of Retail Banking and Wealth Management Paul Arrowsmith to premier bankers early last month, bankers compete for bonuses on the quality of their service, such as how well they can propose and implement solutions to meet customers' financial needs, insiders revealed.
There are no sales targets to meet, sources added, which means one's sales performance has no bearing on his bonus.
Asked to confirm the change to its remuneration model, a HSBC spokesperson said: "We want to build long-term and sustainable relationships with our clients. In order to ensure that we continue to meet our clients' needs, we are actively reviewing how we reward our wealth sales teams."
A sales commission remuneration model - in other words, "sell more, earn more" - is de rigueur for banks around the world because it is seen as the most effective incentive to boost sales volume.
However, there have been calls for sales commissions to be abolished since the Lehman Brothers' collapse in 2008 and, most recently, in the wake of mis-selling scandals in the United Kingdom involving personal pensions, endowment policies and payment protection insurance.
In October, Barclays, the world's fourth-largest bank in terms of total assets, did away with commissions for its 18,000 employees in High Street branches and call centres, opting for bonus payouts based on giving customers good quality service.
One affected HSBC staff member, who spoke on condition of anonymity, said: "It's quite a major change and we're still quite uncertain as to how our performance will equate to our incentives. But the top performers will probably not be earning as much as they used to."
But they also recognised benefits of the change for consumers. Said one banker: "There's no pressure to sell, so the emphasis is on the process. I think bankers will definitely try to reach out to more clients and get to know their needs better."
A check by TODAY has shown that no other banks here are embarking on similar changes to their remuneration models, although factors like poor customer service and compliance lapses, for instance, do affect whether one gets the full commission. At Standard Chartered, for instance, "service quality, compliance and assets under management" affect Relationship Managers' commission. Professional certification and continual professional development are also considered.
According to sources, these account for 30 per cent of sales staff's key performance indicators (KPIs).
DBS also includes non-sales KPIs, such as the quality of advisory and sales process, suitability of product recommendation and customer satisfaction, according to a spokesperson.