In a statement today, The Financial Markets Authority and Reserve Bank said "all banks" have pledged to scrap sales incentives after the joint review into banking conduct and culture last year.
In the conduct and culture report, the FMA and Reserve Bank expressed concerns that sales incentives skewed outcomes for consumers and led to mis-selling.
The report concluded the approach to managing conduct risk was "weak throughout the banking industry" and that the 11 banks reviewed had "not sufficiently put customer outcomes at the heart of their business".
The regulators required banks to outline their plans to eradicate sales incentives no later than the year after September 2019. The FMA and Reserve Bank now say banks have committed to the task.
FMA chief executive Rob Everett said: “Our review highlighted concerns about sales incentives for frontline banking staff. Other banking jurisdictions are also focused on this issue and the commitment to remove these incentives in New Zealand is a significant shift for banks."
"The real test of the success of these commitments will be the type of behaviour that is rewarded in the future," Everett added.
RBNZ governor Adrian Orr said the changes to sales incentives needed to be matched by improved boardroom governance.
“Culture comes from the top and boards and senior managers at our financial institutions need to be leading by example. Our review of bank plans shows there is still work to do at the system-level, but there is a much bigger concern and question about the culture being instilled and fostered at governance level."
Orr added: "Boards are critical in leading the cultural shift that is needed to promote long-term customer outcomes. It is critical to embed new processes and governance systems within banks, and we will be monitoring their progress with this important work.”