The banking industry needs to keep up the momentum on reforms – and the financial regulator must continue to put consumers first. Do you think enough is being done to change banking culture?
The banking watchdog has been baring its teeth over the past two years, and there’s evidence that parts of the industry have responded.
Our latest investigation into banks’ selling practices reveals signs of progress since we last looked behind the scenes, in 2012. There are still issues – targets have been rebranded as ‘outcomes’; some staff still say they know of colleagues who have mis-sold financial products – but there are positive signs in certain places.
Taming the financial industry
Change happens only if individuals make it happen. So the recent sudden departure of not one, but two consumer-focused industry leaders – Antony Jenkins from Barclays and Martin Wheatley from the watchdog, the Financial Conduct Authority (FCA) – causes me great concern.
Some people within the industry might view these two big scalps as a message that they’ve done enough to tackle mis-selling and can now just get on with the job. But it’s not enough; changing the culture will take far more work. The FCA has done much to tame the wilder side of the industry, and Which? has firmly supported its show of strength, including a robust line on mis-selling.
Cleaning up the banks
But in its latest report and guidance, the FCA cites intelligence that changes to reward structures haven’t always shifted the sales-focused culture. Instead, it says there are ‘indications that in some cases, the progress made on financial incentives may have led to an increase in pressure… on staff through other means to achieve sales’.
This echoes the findings of our investigation– much done on specifics, but plenty more still to do on culture.
The new chief executive of the FCA, when appointed, must carry on cleaning up the industry and not let the good work be undone. And the FCA must continue to speak out independently, otherwise consumer confidence in the regulator will be no better than the low levels of trust that consumers have in banks.