Let’s end the sales bonuses that encourage bank mis-selling

Here here. In my experience, management need “targets” that can be measured as a means of managing/appraising staff. Gone are the days when a manager would know if a member of staff was doing a good job. And staff would end up concentrating on targets to the detriment of other parts of their role, just to get what they considered to be there’s anyway.

I had a terrible time implementing targets in a software company, I was told to measure an employees work rate by counting the number of issues they had fixed. What a stupid idea, the best person would be given the hardest issues and therefore fix the fewest number, but would be doing the most responsible work and be the most valued in my team, but the targets would not take that into account. STUPID. Senior management have a lot to answer for.

To end the sales bonuses will actually work in favour of the banking industry, as consumers are going to be happier. Simply because they’re genuinely going to be listened to, as opposed to be seen another bonus. Today’s customers are savvy and well aware of their needs; they can in fact make more informed decisions if they’re let alone.

If banks invest half of the time they commit to training staff on how sell things to people over the counter, commit to customer service, high quality delivery and queue management; banking reputation will be improved massively – without a need for any PR campaigns.

Couldn’t agree more – Initially my original bank was helpful – always looking to help me achieve my potential future. They were so good – I kept the same branch even though I moved many miles away. Then they became greedy and I became a number not a client. I left. The on-line bank I now use treats me as valued client – never tries to sell me anything if I get in touch – though their newsletter does.

Sales Bonuses have led the way to pressurisation of the customer and changed the ethos of Banks.

i am a retired solicitor, The bonus incentives now deplored are nothing new. With the acquisitive attitude of mind encouraged by the Thatcher government many firms including banks,insurance companies and building societies took advantage of their short sighted customers. These were told they could borrow multiples of income far greater than previous generations had been allowed.They were told they could afford to do so because the loans would be over longer periods (thus earning the lenders more interest) they did not need to repay capital and so the monthly payments were less and of course the lenders would arrange life cover on a Endowment basis so that the capital would be repaid at the end of the loan period. A little later when the Government modified the State’s cover for Mortgage interest and there was a danger that the fish might see the hook the insurers/lenders came up with PPI.

How to get the borrowers aware of all these “goodies”? Why,of course, the staff must introduce them to the borrowers,now regarded as mere consumers of the financial products which would earn profits for the lenders the like of which traditional retail banking had never seen. The staff knew little about the true merits (none really) of these innovative products but were trained sufficiently to become sales personnel but not enough to have a professional attitude. In any case the commissions for sales were such that even those who knew the consumers (or perhaps by this time the “marks”) would get a rough deal that the anticipated returns on the Endowment premiums were hopelessly overoptimistic and that the chance of a payout on the PPI policy was for many who bought them unlikely or impossible were seduced by well lined pockets into leaving their conscience
out of the equation.
In order to keep the bonus driven profits rolling in the banks etc sought to widen their markets still further. No need to prove you income,oh no; in return for higher interest rates just self certify. Many who had new businesses or precarious sources of adequate income could benefit. So could the downright liars fools and fraudsters.By this time the pressure to sell more and more and so earn more and more bonuses was such that most pedlars of these dubious products no longer distinguished prudent lending from reckless risk and what is more did not care.
The amounts being loaned were not sustainable within the lenders resources. Never mind borrow short and lend long! Hence LIBLR used as not intended.To cover that unsustainable notion till longer term profits were made profits must come over from investments
In the meantime the money generated on the moneygoround were invested or rather gambled on all manner of investment markets/products which promised high returns for greater risk and then in an effort to spread the risk the greedy bonus seekers of high placement entered upon the final lunacy of Sub Prime infected Bonds which were so “clever” that they did not understand that the house of cards they had built now had subsidence issues!

We all know the outcome.

If high salaries incentivised by prudent lending and knowledgeable risk taking had been the norm instead of bonuses/commissions based merely on the paper “value” of products sold and “deals” done then it is clear the present mess would either not have occurred or would not be as intractable,because the level of debt all round would have been smaller.