/ Money

Let down by the banks? It’s time for a Big Change

Five years on from the start of the credit crunch, almost three-quarters of people don’t think that the banks have learnt their lesson and only one in ten believe that bankers act in our best interests.

We thought we’d seen banking at its lowest point when the public were forced to bail out the banks but since then we’ve seen the Libor rate-rigging scandal and continued mis-selling. All the while the bankers who presided over corruption continue to enjoy hugely inflated pay and bonuses.

The ‘Big Change’ campaign

Consumers are continually being short changed – we need to see Big Change in banking now. We’re setting out three simple asks to kick-start this change.

Customer service should come before sales, standards and ethics must improve, and bankers must be held to account. We want banks for customers, not bankers.

If we can achieve these three goals we’ll go some way to restoring the public’s faith in the banks. And so for the detail:

Bankers should put customers first, not sales. We want pay and bonus schemes introduced at all levels within banks to prioritise customer service not sales.

Struck off for malpractice

Bankers must meet professional standards and comply with a code of conduct. We want professional standards to be enforced in the banking industry. Like in the medical profession, staff would have to adhere to a code of conduct and they could be struck off for malpractice. Bankers at the most senior levels should have compulsory qualifications and training in ethical behaviour and resolving conflicts of interest.

Bankers must be punished for mis-selling and bad practice. We want senior executives held accountable for mis-selling and poor conduct, and stronger criminal sanctions – all the way up to board level – if they have presided over corrupt practices. Bonuses should also be clawed back in the event of mis-selling.

Pledge your support for Big Change

The government has set up an inquiry on banking standards that will provide recommendations on how the industry needs to change. You can help by pledging your support for the Big Change campaign and asking your friends to do the same. Let’s tell politicians and the industry that banks should be for customers, not for bankers.

We’ll be holding a consumer event with the inquiry’s members on Monday 24 September. If you have a question that you’d like the panel to answer, post it below. We’ll be posing your concerns to the panel on the night and posting their responses below.

Alistair Scott says:
19 September 2012

Financial de-regulation in the 1980s changed banks from previously staid, cautious and dependable organisations into gambling dens.

Their aims changed from looking after their customers’ money to setting up hugely complicated and risky financial trading systems that would enable them to gamble with their customers’ money and generate vast bonuses for themselves.

In the US, Canada, Ireland and Australia there are alternative banking systems, called Credit Unions. They are co-operative financial institutions, owned by the people who put money into them.

Credit Unions are still a tiny force in the UK, and they have been deliberately hampered by restrictive regulation (which does not exist in the other countries I mentioned). It’s time for the UK to boost its credit union sector. They look after members’ money responsibly.

Hi Alistair,

I agree that more needs to be done to expand the Credit Union network in the UK. Keep an eye out for the government’s consultation on the expansion of credit unions in the Autumn. We’ll be responding, but you may want to let them know what you think too?

I was with a Credit union in Australia for many years, and was disappointed when I moved to the UK and had to deal with the traditional banks. In the twenty plus years since, the disappointment has turned to anger, and I certainly don’t see the likes of the Cooperative shaking anything up. The banks have had their chance, there needs to be a real alternative offered. In my experience the Credit Union model, combined with traditional Building Societies offer that alternative.

In April 2009 Royal Bank of Scotland closed its existing 60 day ISA to new customers and opened an Instant Access ISA paying over 2% interest. The rate on the 60 day ISA was reduced to 0.1%. RBS did not inform existing customers of this change personally but relied on customers reading of the change of rates in National Newspapers or on their web site. Since interest on this account is paid yearly the first indication of this change, for most customers, was when the yearly statement showed the paltry amount of interest paid. A simple letter to customers telling them of the changes was all that was required. If this is not a case of appalling customer service I do not know what is.

Leesa Daymond says:
19 September 2012

Great campaign, all the very best with it – anything that brings reform into banking gets my vote! In the meantime why not #moveyourmoney from the mainstream banks to credit unions and choose a more ethical banking system.

Noel Privett says:
19 September 2012

While Which?’s new Big Change campaign “calls on banks to put customers first not bankers,” Charity Bank already offers an alternative – it’s charitable mission means it doesn’t need to compromise on customer service or social goals for shareholder profit. And while Which? found that only six per cent of people it surveyed associate ethical behaviour with bankers, this is clearly not the case at Charity Bank – with 99% of customers saying they would recommend the bank to a friend.

Charity Bank offers saving products to ordinary savers and loans to charities, and its purpose is not to maximise profit but to maximise the positive impact for the communities that its borrowers serve. The Bank’s commitment to complete transparency – publishing the details of every loan that it makes – means that customers know where their money is going.

Charity Bank’s savings rates are lower than a traditional bank, but the social returns are significant. In its first 10 years, the bank has made around 1,000 loans, valued at more than £170m, which support project expenditure of over £360m and are estimated to have improved the lives of 3,500,000 people. And at time when traditional banks are lending less to charities and social enterprises, 70% of Charity Bank’s borrowers said that their project would not have gone ahead without a Charity Bank loan

Although Which? found that only 11% of people trust bankers to act in their best interests, Charity Bank is an exception because it puts people and planet firmly at the centre of its decision making, which makes it part of a growing worldwide social banking movement.

It’s great to hear about the ethos at Charity Bank, I am sure you must have many happy customers. The problem is the rest of the market doesn’t have the same approach – we need your competitors to follow your lead.

After using Peer to Peer banking now for over two years now, I have decided to move all my money out of regular Banks and put it in to this form of Banking, I can get 6% or more return on my money.

Is it not time for the Government to protect your money in these Banks just the same as the big Banks. Hit the big boys where it hurts in the pocket! Move your savings away from these Bankers.

Tony S says:
20 September 2012

Banks used to be trusted institutions but who have taken their customers for granted over many recent years possibly being helped by employers insisting that all remuneration, no matter its size, be paid directly ibnto bank accounts. They then had supreme monopoly and pushed out their sales patter of credit, either thruogh loans or credit cards.

Hopefully with the Which? campaign they will now have a rethink and return to their traditions – a vain hope perhaps but one never knows….. Interesting to read other comments about Credit Unions, I will be investigating. Good luck with the campaing Which?!

After some years experience living and working in Canada, I would agree that an expansion in the numbers of Credit Unions in the UK might well help to bring about a welcome change in the’Big Banks’ attitudes to customer service.
Unfortunately I’m not sure how we could begin to achieve this-perhaps the trade unions could help.

John Chappell says:
20 September 2012

I know we are very fortunate to be in our position but we have our personal, business and Client banking with NatWest, as well as our mortgage. All accounts have very healthy balances at the moment, so the bank do not need to chase us or harrass us in respect of any of these. However, we have just had a massive hike in bank charges of 300% because according to the bank “as we have to maintain free personal bank charges after the FSA reviews, we have to recover our costs and in order to be able to maintain our high levels of service”. So it now costs 62p to bank every £ 100 cash taken and being in a seaside town where many people are still paid cash, our bank charges for August under the new regime were £ 92.00, against £ 24.00 in July. No overdraft, no loans or debentures. Just people’s hard earned money being paid into a bank account. I can only envisage what nightmares must be had by those who are trading close to their limits or whose income just covers their bills or who need an overdraft etc.
When the bank earn interest by the day on all of our balances as well as our mortgage, and we have chosen non-interest bearing accounts and move funds ourselves between accounts by electronic banking, set up our own standing orders and direct debits, how does it cost NatWest to handle our accounts ?
Don’t even suggest that we look at moving banks because whilst some charge less for handling cash, they charge more for electronic banking etc so it’s not worth the hassle of changing. It’s just scandalous that in a supposed “market economy”, the banking regulator rules over a good old- fashioned “oligopoly” worthy of Stalinist Russia – “Da, ve hav choice Comrade, our vay or no vay” !
On the expiry of our current mortgage deal, we will certainly be coming to Which for advice, as we no longer have any customer loyalty to NatWest, it’s just a shame that Which can’t open a bank as well because none of them can be trusted to have our best interests at heart now !

mike butcher says:
20 September 2012

I worked for Lloyds from 1961 and left in 1978 after 5 years in management cos we were told to sell financial products and make profits based on customers trust not what was best for them.This will not change unless all Banks go back to charging for current accounts and make this their source of profits as it used to be.Thats unlikely cos there is other competition so the free market will have to stay and we must all remember that we cannot trust others to look after our interests as a matter of course

Glass Steagall Act 1933 must be re-instated and rolled out world wide. That is splitting commercial banking from investment banking. It was introduced after the 1929 wall street crash and worked for the last 60 years and must be re-instated.

It was repealed in the USA in 1999 that led to the current crisis. Until it is re-instated no one can have confidence in the system.

This split operated in USA was imposed by USA on Japan. The split exists in China. The financial models of long term commercial finance is completely different from short term, high risk investment banking. The two models are not compatible.

The current UK proposals can never work it is another disaster just waiting to happen.

So very, very true, VI.

It simply beggars belief that –

Glass Steagall is introduced following a financial crisis.
For 60 years (60 years!) Glass Steagall works perfectly.
We repeal it
Within a decade we have a financial crisis. A double dip recession.
Yet hardly anyone calls for its reinstatement.

Staggering. Totally beyond belief. We’re being royally shafted by the government and the bankers.

Patrick C says:
20 September 2012

Whilst I applaud any real ethical banks activity, I do not think that they should be advertising there services here.
As for Credit Unions, we had loads in this country, they were called building societies, but greed ended up with many becoming banks.
We also need to be careful with the method in which we punish the banks/bankers. They will increase charges by some means so that they can continue to up the returns to their boardroom and shareholders.
I whole-hearted support this campaign Which?, but it needs careful formulation for it to have any chance of being effective.

John Chappell says:
20 September 2012

I also feel sorry for the bank counter staff, not the city boys but the grass roots staff. My wife used to work for a national estate agency chain, who operate like all of our major banks and the way they treat their “ordinary” staff is disgraceful. She left because of the “target” culture forcing them to try harder to sell mortgages, insurance and pensions than selling houses. Staff who don’t achieve don’t just lose out by not getting small bonuses or incentives, they get institutionally bullied by area/regional managers who send them on evening “training” courses, which from here involve a 100 mile round trip, endless performance reviews and individual performance indicators circulated around all branches in each local hub. Surprised that they’ve been caught out mis-selling financial products or giving poor advice ? I’m not because their “training” amounts to bullying in the workplace, which is an offence for the rest of us employers to ignore, because it’s called “performance improvement”. The whole system is rotten and corrupt from the top down and the victims include us as customers and the poor sods who commute every day into your local branch. When my wife questioned their tactics when most staff only want to provide a good service to their customers, and that these methods de-moralise staff and result in a high staff turnover, the explanation was “We don’t expect staff to stay more than a couple of years, so we aim to get the most out of thembefore they leave. Any staff who don’t like their terms of employment are free to leave”. So there you have it, and that is drip fed from the same Head Office that decides that the “customers are asses and will take what we give them” – or at least that’s how it looks from here !

thelorax says:
20 September 2012

I recently heard on the wireless that there is $21,000,000,000 sitting in offshore accounts. This is mostly tax evasion monies and illegal profits etc… Isn’t it about time we had these states and their banks blacklisted until they give us details of who has what and where it came from so that we can tax them and get our services back up and running. I wonder how many of our M.P.s would show up on that list?

Rien van den Hondel says:
20 September 2012

I would like to point readers to http://www.positivemoney.org.uk where is explained how a lot of the problems with banking are caused by so called Fractional Reserve banking. If we can get the system changed to Full Reserve Banking we could stop the endless boom and bust cycle and stop bankers creaming off the profits generated by society. Did you know that when you go to the bank for a loan they don’t supply you with money deposited by savers, but that they create that money out of nothing at that moment? Please read more. The more people understand how the system works the more chance we have for real positve change.

Omce upon a time, the then Nationwide-Anglia building society had the slogan “we never forget whose money it is”. Of course, they and every other bank did forget. The whole banking industry would do well to put that slogan at the top of its list of priorities!

Derrick Bagshaw says:
20 September 2012

There are so many changes that are required in the activities and attitudes of our banking industry that it is not easy to establish an order of priorities. However what surely should be at the top of the list is the separation of investment banking (casino banking) from retail banking. Suggestions that a firewall could be created between the two without real separation is a delusion. Firewalls can be tunneled underneath or jumped over and there is nothing in the recent history of banking practice to indicate that bankers would not go to extreme lengths in order to do just that.In the meantime depositors should vote with their feet and shift their accounts to non bank institutions (or the Coop)

Patrick C says:
20 September 2012

Steady Rocky, the Nationwide still is a building society owned by its members.

But Nationwide still has the same pressures on its staff to sell, sell, sell. Or at least it had when I retired.

We moved our account to Halifax because, conveniently, it was the only banking agency in our large village. Since the takeover by Lloyds absolutely nothing has been done in the interests of the customers. First they closed all the agencies. Everything that was simple is now so complicated. My grandchildren’s accounts that I am trustee for, could be seen online, although I couldn’t do anything with them, but that was fine. Savings accounts drop their rates to as little as 0.1%. The monthly saver used to drop into a savings account each year, now it changes to a different account and you have to set up a new monthly saver. What was easy to manage becomes a nightmare and when you telephone at a premium rate the person at the other end of the line is unable to help. I then went into the branch and three members of staff did not know what was going on. Then I had to make an appointment, all for something that was so easily handled before. and I cannot see that my money is even going into the children’s accounts.

No. Sorry. I shall not support the Big Change.

If “only one in ten believe that bankers act in our best interests” then let the other “nine in ten” go elsewhere. There are plenty of choices, the most obvious being the Nationwide which is regularly near the top in Which? reports.There are other building societies plus the Coop, which routinely put customer satisfaction ahead of profits.

If we complain or sign up to the Big Change the very best we can hope for is a modest improvement in the traditional banks.

But if the nine out of ten customers who are unhappy leave the bank and go elsewhere… If the big banks lose (a staggering) 90% of their customers… What do YOU think will happen?

Complaining can be counter productive – it identifies the minimum level of service we will tolerate. If we go elsewhere, businesses have to substantially exceed the levels of service offered elsewhere to get us back.

[PS. As the building societies grow they’ll need more counter staff, etc. so don’t worry too much about redundancies at the big bad banks]

Hi Gradivus, I’m sorry to hear that you won’t be supporting our campaign. We agree that it’s important for customers to move away from companies that aren’t giving them a good service, but when it comes to the banking sector, this does present some problems.

For example, while there are banks that score highly for customer satisfaction, the four banks with the highest scores currently hold only 6% of the current account market. On the other hand, the six banks with the lowest scores hold over 38% of the market. In fact, none of the large high-street banks even made it into our top 15. So while there are other options available – the smaller banks at the top of our table don’t have the reach of the bigger banks, so far less consumers are aware of them and their good work.

In addition to that, we encourage people to switch banks, but it isn’t always an easy process. The introduction of portable account numbers could make the process of switching banks far easier, which would also encourage competition and improved customer service levels between the banks.

Hello, Jennifer. Thanks for your comment.

Whilst I agree with what you say in general terms, I do think you are overstating your case.

The smaller banks at the top of your table might not have the reach of the big-boys, but consumers are surely not unaware of them. The Nationwide, for example, regularly advertises on national television. And there are several posters here who seem to be almost boasting about how badly they have been treated by their bank – why aren’t they ACTIVELY searching for something better?

I’ve heard mixed stories of people switching banks – some good, some bad. Subjectively, most of the problems seem to stem from the “old” bank rather than the “new” – surely reason in itself to persevere?

I hate to sound negative but I really do think your campaign will make little difference. In fact it could be counter productive. If the big-banks improve slightly it might well encourage unhappy customers to stay (“My bank is bad but not as bad as it used to be”). Whereas if we can persuade people to abandon the big banks in droves we WILL see real improvements across the board.

We live in a capitalist society. Losing customers terrifies capitalists and keeps them awake at nights. Which? campaigns do not.

Maybe Ive just become too cynical.I would dearly love for the banks/bankers to be brought to heel but cant see it happening.Who will be members of the Dec.2012 government panel? I will lay you odds it will be members of the establishment,MPs & other city slickers & boy oh boy will those gentlemen!!! sort out the problem.When the man/woman in the street has a proper say in this disgusting show of contempt & disregard of fellow citizens then & only then will we be able to see the end of this near criminal conduct.