Britain’s banks need a generation to change the bad behaviour which has cost them £38.5 billion in fines and compensation, claims a new report.
The report into the culture of British retail banking by the New City Agenda think tank says that an aggressive sales culture gripped the banks for two decades with branch staff receiving cash bonuses, iPods or even tickets to Wimbledon for hitting their sales targets.
Think tank chairman David Davies MP says: “A toxic culture which was decades in the making will take a generation to turn around. At this critical juncture, Britain’s biggest banks cannot afford to let the better treatment of customers become a second order priority.”
The banks have set aside £38.5 billion for fines and compensation since 2000, claims the report, and have received 20.8 million complaints since the financial crisis exploded in 2007-08.
While the report acknowledges that the banks are working to improve their stance towards customers it adds that ‘an entire generation of staff have been raised and, in some instances, promoted in an aggressive sales culture.
Front line staff have told researchers that they still felt ‘under pressure’ to sell products and stakeholders say they are sceptical about the banks changing their behaviour quickly.
“Most people told us that change will take at least five years,” says the report’s main author, Professor Andre Spicer. “There was some uncertainty as to how these changes were being translated into good practice at the customer coal face. Many culture initiatives are fragile and their success is not ensured.”
The research was based on interviews and documents from 11 banks and 16 other organisations.
The report claims that the mis-selling of PPI has cost banks £27 billion, though the official figure of money set aside is now approach £23 billion. Lloyds Banking Group (LBG) has set aside £11.3 billion, Barclays £5 billion, Royals Bank Of Scotland (RBS) £3.3 billion and HSBC £2.5 billion.
Latest figures released by the Financial Conduct Authority (FCA) show that the banks have actually paid out £16.6 billion since January 2011. Successful claims are still being paid out at an average of £371.5 million a month.
John McFall, a director of New City Agenda, says: “The need for culture change has been recognised, but it has to be transmitted all the way from the top to the bottom of these huge organisations.”
The think tank is recommending the Banking Standards Review Council should talk to branch staff to check they are not under pressure to sell and should report annually to parliament’s Treasury Select Committee which oversees the work of the finance industry.
In August an LBG whistleblower claimed staff are still mis-selling to customers because they are in fear of losing their jobs for not hitting increased sales targets.
All four of the big high street banks are currently under investigation by the Competition and Markets Authority (CMA) for the way they carry out their business.