OK, this is the final part I am going to write up about
Fixing the Banks (a session that is being repeated at the Financial Services
Club on 14th May). The final part of the discussion focused
upon the customer.
It was opened by Dominic of Unite and completed by James
Daley of the Which? Consumer organisation.
The opening salvo began with a thrust at the sales culture
Banks moved from being trusted advisors on finance to retail
credit pushers during the last few decades and, in so doing, created a
pervasive and poisonous culture of mis-selling.
Endowment mis-selling, pensions mis-selling, payment
protection mis-selling, swaps mis-selling.
The list goes on …
… and it is endemic and invasive within the culture of the industry.
It costs the industry billions to sort out the mistakes, but
then you wonder what the sales profits were that created the billions of fines
in the first place.
And it is all down to an industry being able to sell
products to naïve customers who don’t understand what they’re buying because
they don’t understand finance.
This is as true today, even after all these scandals, as it
was yesterday, if not more so.
Go into any bank and you find whiteboards showing what was
sold by whom the last few days and weeks.
It used to be that you would get incentives and bonuses for
that but, since the Financial Services Authority review, there’s been a big change.
Now, you don’t get an incentive or bonus for selling mortgages,
credit cards and loans.
According to Dominic, it’s now part of your performance
In other words, you sell these products or you get sacked,
as your basic level of job is measured on a minimum number of sales per month.
So is the customer really at the heart of the bank?
No, not really. They
are there to be financially raped.
Dominic and James both believe that this culture of
measuring and managing staff and mis-selling and stealing from the customer’s
share of wallet is a core issue in the banking system today.
It is caused by three basic issues:
The structure of the industry, and the fact that
there is little new or effective competition;
The culture of the industry, which rewards the
wrong behaviours even today after all of the problems of the past decade; and
The regulation of the industry, which has been insufficient
What is needed is more focus upon the bank’s code of conduct
and certification of staff, and a rethinking of how staff are rewarded. By way of example, HSBC has removed all remuneration
of staff based upon bonuses for sales, apart from at Board level.
James finished off his presentation by calling for action.
The action is for Big Change in Banking, with Which? calling for three Big Changes in
Bankers should put customers first, not sales
Bankers must meet professional standards and
comply with a code of conduct
Bankers must be punished for mis-selling and bad
I must admit that last bit left me feeling a bit angry.
After all, if you go into a Tesco and want to do some shopping,
should Tesco grab you at the door, ask what you are buying and, if they know it’s
a better deal at Sainsbury or Morrison’s, ask you to leave and go there
If you go into a chemist and say I’ve got a clod, should the
chemist check you out with a factfind before offering you medicines?
I know that most people compare banks with doctors, and say
they shouldn’t push you with all sorts of medicines but should first find out
what’s wrong with you.
We have this view of the seller is the problem and the buyer
is just there as a gullible idiot waiting to be fleeced.
Maybe so, but banks are sales firms. They are not doctors, but chemists.
And customers are there to be fleeced, which is why it would
do them good to remember some caveat
emptor – the buyer beware.
And yes, I know there is fine line here between the company and
the customer’s interests, but far too often I think we just accept that banks
are always the bad boys when customers are just not engaging their brains when
Now that should start an interesting debate.
Anyway, that’s it for now.
As mentioned, we have a repeat evening of this debate at the
Financial Services Club on 14th May with:
- Charles Middleton, Managing Director of Triodos Bank;
- Dominic Hook, National Officer for Finance and Legal with the Unite union; and
- James Daley, Head of Money Content with the Which? Consumer’s Association
This was part five in a five part series:
- Fixing Our Banks: Part One
- Fixing Our Banks: Part Two – the Bank View
- Fixing Our Banks: Part Three – the Shareholder's View
- Fixing Our Banks: Part Four – the Employee's View
- Fixing Our Banks: Part Five – the Customer's View