/ 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.

Comments

All these problems are distressing, yet the problem did not originate with banks, but with Politicians, when they repealed the regulations between commercial and investment banking. The vitriol from politicians is all propaganda to shift the blame and it appears to be working.
The solution is legislation [Glass Steagall Act 1933] re-introduced on a global basis splitting commercial from investment banking. All the problems that customers raise would then be addressed. If this split is not introduced than change and will NOT happen, customers NOT served and the economy will NOT recover. Yet Politicians either do not understand this basic concept or else do not want to understand. WHY?
Investment banks for decades were operated by owners/partners and it was their personal money that financed the business. Repeal of Glass Steagall Act allowed change and transfer to a corporate body to become a global operator. New global banks where ‘risk taking’ and ‘ownership of risk’ was divorced allowed corruption, with no accountability. Products were sold on false information. In contract law that makes the contract void! So why are customers and countries still paying instalments on VOID CONTRACTS!
Vicker’s Report will not work. Regulators always take action AFTER THE EVENT. Financial Service Agency has proved gross incompetence. The Financial Ombudsman Service first step is always to decide in favour of the Bank, even in cases of corrupt and even illegal bank practice over protecting customer rights. Even when it breaches the basic principle of contract law! Every step in this disaster you the voter/taxpayer is being abused. Until you demand good governance you will continue to be abused.

Stuart says:
25 October 2012

I am of similar opinion to everybody else, the banking industry is not working for the customers that (let’s face it) have no choice but to use it – there is generally no option, my salary MUST be paid into a bank/building society, and the service I get from my bank has been poor, and in 2 cases incompetant (I would say almost criminal in one case).
I say banks should be fined for all the mistakes and underhand activity that their customers (us) have to endure each year – a set amount for each failing – the money the directors and share holders receive should, instead, be placed into a fund. At the end of each year, before it is paid out as bonuses the fund should be used to compensate the customers directly.
The Directors and share holders get what’s left.

I think this will soon make the banks give a better service.
Wonder what anyone else thinks about this?

ThomMorgan83 says:
25 October 2012

I’ve complained to the banks and received the usual brush off, HSBC is especially horrific, too busy laundering money (they’ve even been fined) to care about customer service. I’ve signed up to this Big Change campaign but it’s high time I actually did something other than complain to and about the banking abomination in this country: I am putting my money where my mouth is: I am changing all my accounts and credit cards far far away from HSBC and over to a mutual or cooperative, a building society: The Cooperative Bank or Nationwide probably. UK call centers, mutuality, I should have taken the time to do this years ago. It’s my commitment to the Big Change campaign. Especially now that doing family history research I find family members were part of Friendly Societies, indeed many people were: there’s a history of banking and corruption and government that we need to know about and act on.

Andy says:
25 October 2012

There are many people promoting the “Nationwide Building Society” as an alternative.
As a customer for 22yrs I have to advise that they are now no better than any bank
Over the years they have lost the plot, and pay derisory interest the same as the rest.
Yes you may find they have a arguable “top of the pops” instant access savings product,but with one withdrawal a year what good is that.
They used to be a cutting edge institution,and paid yearly interest on current accounts, were the first to follow the Australia model in paying daily interest on Mortgages ,shaming the other Banks into following suit,the current account interest is now gone.
The members of staff who were there when I joined the branch were a delight to deal with,and felt more like friends, they have all left now disillusioned with the changes in the society.
The staff now will try and sell you products the same as the rest,which are available much cheaper using comparison websites.

There is another “sharp practice” that all banks and society’s are now using, and that is with savings accounts that require notice.
In the past if you withdrew without the required notice you lost the interest you accrued during the time up to the required notice period,usually 90 days,which was bad enough.
But now if you withdraw and haven’t accrued enough interest to cover 90 days interest,the balance is taken off your capital,so you now basically are paying the bank/society interest on your own savings.
Nice little earner aint it.

Andy,

I too have been a member of the Nationwide for many years and would agree they are not as good as they were.

But I suspect that the deterioration is because the banking industry is now so fiercely competitive that the Nationwide would simply go out of business if it continued to stand ‘head-and-shoulders’ above the rest. The base interest rate is set by the BoE; if Nationwide offered savings accounts at a significantly higher rate they would attract huge numbers of savers, but their mortgages would be hopelessly uncompetitive, for example.

Console yourself that they are still very much better than the big-boys.

Andy says:
25 October 2012

John W

Indeed the base interest rate is set by the BoE but that seems to have no bearing on the rates banks charge for a personal loan.ie BOE 0.5% base rate ,Loan 7.0%

To clarify I did not suggest that Nationwide should be offering savings accounts at significantly higher rates, only that it used to be a market leading society, which introduced innovative products that other banks had to follow.
Products and services which were an advantage to the customer.
Those days are long gone.
Now the Nationwide is mediocre.
They promote themselves as a mutual society for the benefit of there customers.
As they have no Shareholders to pay profits to that should be an advantage for the members,it used to be,but not now.
From WiKi
Quote In the financial crisis of 2007–2010, the Nationwide has acted to safeguard the mutual sector, acquiring the ailing Cheshire and Derbyshire building societies in September 2008[3][4][5][6] and the Dunfermline Building Society on 30 March 2009.[7] No member votes were taken, and no windfall benefit were given to society members. Quote

So no member votes and no windfall benefit for society members.(What about the board?)

Quote From 6 May 2009 Nationwide began to pass on the Visa fee for credit card transactions conducted outside Europe. Debit and credit card customers began to be charged from 1 June 2009.[21] There had previously been no fee for transactions conducted abroad on Nationwide credit or debit cards. Quote

Yet the board see fit to award them selves salaries equal to those of banks,which members have protested about,as usual market forces is used for justification.

Fair enough, Andy.

The Nationwide is a mutual owned by its members. The members have voting rights.

You are a member. If you’re not happy….

You are a member. Do something to improve the Nationwide….

You cannot do anything about Barclays, NatWest, HSBC, etc. But you are a co-owner of the Nationwide. If you’re not happy with the bank you partially own….

Andy says:
25 October 2012

Gradivus
You assume I didn’t vote against remuneration.
You obviously are not aware what happened at the AGM to objectors

Stuart says:
25 October 2012

It’s hard to disagree with anything that most people are saying, but I think there is a way to actually do something about it to (a) rectify what’s happened in the past, (b) make sure it doesn’t happen in the future and most importantly (c) penalise those who made it happen in the only meaningful way they understand, namely their pockets.

Financial penalties on Banks only succeeds in them raising fees/costs elsewhere to make up for the shortfall, i.e. the customer pays in the long run. So, if you want to change the culture of this rotten banking system, it has to be done in a way that is effective and penalises those most responsible for the bebacle, while making sure that the incentive is for these people to remain responsible in both their actions and their consequences.

I would suggest the following
1 No Bank bonuses should be paid in cash. They should only be in shares, recognise only outstanding achievement and cannot be cashed until the end of their contract. This incentivises less risk taking and more responsibility so that the share price remains stable and not volatile.

2 Goodwin, Diamond et al, made zillions from their high risk strategies, but their only sanction was to lose their jobs, yet still walked away with multi million pound payoffs and pension pots. However,millions of other Investors/Pension Funds etc invested billions in these Banks, often based on ‘fraudulent’ and spurious information and data and were therefore cheated and lost fortunes.

I would advocate bringing “Class Actions” against all of the individual bankers (and others) who profited from these reckless procedures, which caused people to lose their jobs, homes, families and more. The relative cost of this would be small if enough people joined the Class Action and would really hit those responsible in the only way that would make a difference. IN THEIR POCKETS.

If Goodwin, Diamond et all, had to pay back all of the millions they effectively ‘stole’ from us, they would (a) suffer the same as the rest of us, (b) make those remaining in the industry more honest and responsible and (c) it would engender a little more trust from the public to invest again, knowing that those given charge of their money would deal responsibly with it. I also wouldn’t rule out the possibility of criminal charges against those most responsible for bringing a once proud industry to it’s knees.

Anyone interested in the idea of bringing a ‘class action’ please feel free to contact me and I’ll happily put the wheels in motion.

Brian says:
25 October 2012

Hi Stuart, at last someone is not only describing a critical view but is offering a solution.

I agree with all you say. All I would add is that being an ex-banker of the old f..t school, I do not like the word banker being used when describing Goodwin, Diamond [and Hornby et al] etc. None of these was qualified as a banker and came from the accountancy or marketing culture. Your comments regarding bonuses are very relevant and should be implemented immediately [if not already so] and there must be a way of running a bank which is not solely to pay the shareholders a good dividend. Bottom line profit culture should be banned and therefore targets at all costs would be verboten. As for class actions I think that this has great potential if there are sufficient numbers to cover the fees. Thanks for the constructive comments.

Brian says:
25 October 2012

I forgot to mention [Stuart] that I have written to the Prime Minister, the Chancellor and Andrew Tyrie offering my suggestions as an experienced retired banker of the traditional school.

I am still awaiting a reply from all three!! Is this a refelction of the real attitude of the powers that be?

Peter says:
25 October 2012

In my experience across every well known established retail bank I’ve dealt with they: all offer the same poor “service”;are very reluctant to admit their often repeated mistakes except when vigorously pursued;are often found to be incompetent;are not averse to sharp practise and all continue to drift down the cliff as if led by the same Chief Lemming for Customer Service.

Let us hope that they are all unable to swim and drown as they don’t deserve any customer support.

Mike says:
25 October 2012

At last somewhere to vent my frustration and disgust at the banks…..

Banks show no loyalty to their customers yet expect it back from us. The phrase “customer service” should never be used in the same sentence as banks. We are only viewed as people to whom can be sold some low yielding (to us) or inappropriate product that coins in money for them to pay themselves exorbitant bonuses. Gone are the days when you can speak to a bank manager who has the authority to deal with you let alone understands an individuals needs that do not fit in with their tick-box computer-says-no culture.

We may not rewrite the past wrongs but there has been minimal action to stop the scandal of the banks in the recent crisis. I cannot stop wondering why the governments have not tried test legal cases on the following:

1. Use the Companies Act to test if the directors of RBS, HBOS etc were acting “ultra vires” their directorial responsibilities/duties, etc – then sue them to the hilt; it may not much money but at least Goodwin et al couldn’t live the life of riley on their ill-gotten pensions.

2. If the government had not bailed them out, the whole banking system would have frozen for ALL of us and possibly caused mass bankruptcy of companies and individuals, which is borderline treason. So sue them for treason and throw them in the Tower, after the good sport of a [public flogging.

3. The government and any commentator from the financial industry keep on saying we cannot legislate for the bonus culture as the poor dears would be so demotivated that they would leave the country.They should be reminded that the only reason they still have jobs is because the taxpayer bailed them out. And most of the traders’ base salaries are more than generous to the average joe! And they miss the point that there are thousands of intelligent recent graduates who cannot get a job and would be delighted to be able to use their intelligence in rejuvenating the banks for a fraction of what the existing lot are “earning”.

4. Quantitative easing was intended to put funds in the banks so they could start lending to businesses and individuals and so get the economy and the housing market moving again. But they have sat on the cash and what lending that is being done is mainly to existing customers with a credit record. In the meantime, QE has had a drastic effect on reducing Gilts yields which has in turn meant new pensioners are getting vastly reduced rates offered when trying to buy pension annuities. And those of us who were not sucked into the borrow yourself into an unrealistic lifestyle cannot get a return on our savings

David Griffiths says:
25 October 2012

And I thought it was just me that was becoming grumpier and grumpier about banks and their many faces of unacceptable capitalism. My dear old, long-departed Dad had a word for those who conned you out of your money: spiv! And even Uncle Vince Cable used the word last year when he’d had enough of reports about outrageous bonuses. I’m tempted to shout “bring on the revolution”. The idea of a latter-day Oliver Cromwell unsheathing his sword and severing the head from the shoulders of a banker or two makes for the stuff of dreams and might do wonders for the encouragement of others. After all, the bankers do seem to be behaving like CharlesI Let’s all make big badges bearing the words “It’s my money, Chum, and I’m paying your salary. Listen to me!” to be worn when in the presence of a banker …. or an IFA, come to think of it!

Brian says:
25 October 2012

I would not put too much trust in Uncle Vince Cable as you call him. He is too far to the left even off the picth in football parlance. As I have said earlier today to Stuart bankers no longer exist. Computerised personnel called managers in baks rather than bank managers are the norm with boxes to tick and all decision “scored” on a computer with a program designed to make maximum profit and blood out of a stone.

Back to basics of pre 1970’s banking is the answer.

Alistair Scott says:
25 October 2012

For anyone in the Manchester area next Tuesday (30 October) there is a ‘Move Your Money’ meetup at the Manchester Digital Laboratory, 36-40 Edge Street. This campaign encourages people to take their money (or, at least some of it) out of the big commercial banks that have served us so badly, and put your money with more ethical financial institutions, such as credit unions or mutual building societies.

More details on the meetup are at: http://www.meetup.com/Manchester-NetSquared/events/53021842/

Tatto Couligian says:
25 October 2012

The economy and business of this country is based on the market economy principles, thanks to Mrs Thatcher. The market economy may have worked when there was real competition in the market place, but with the advent of global companies and generally companies virtually colluding with each other, there is no real competition and therefore nothing to safeguard the consumer. This problem seems to be particularly prevalent with the banking industry. There is only one solution: strong legislation. Nothing else will make a scrap of difference. For most business people greed is much more powerful than moral conscious.

Stan says:
26 October 2012

I am a retired banker as is Brian. I joined banking in the early 1960s and worked mainly in West and North London before spending the rest of my time in the International Division. My employers got into serious trouble by making a poor investment in a USA Bank. The then Chief Exec got told off (it was his idea) but walked off with his payoff, leaving others to sort out the mess. That is to say most off the staff in the International side were made redundant by new senior managers who were not even bankers.

Anyway! Two little stories to support the old style bank manager; who in my time had a certain amount of independence from Head Office.
My first manager (much like Mr Mannering) took pity on a Salvation Army Officer by lending him £50 over three years on a personal loan to buy a trumpet. He was rebuked because this amount was below a personal loan base. However he had used his own judgement (no credit ratings) to help a person on limited income with little risk and certainly no profit.
Another manager I later met was in charge of a small country town branch. He had a call at home on a Saturday from one of his horticultural nursery customers who had been suddenly offered a quantity of Tomato Plants which he could sell on with a healthy profit. However vendor would not take his cheque. So, the manager in question went and met them both and ended up giving the vendor his own cheque which was acceptable. He then sorted out the accounting at the branch on the Monday.

Two small anecdotes, but they do illustrate the better role a resident bank manager can provide. Not that he would support those who see banks a source of permanent risky small overdrafts with no charges.

Brian says:
26 October 2012

I’m pleased that you took some time to comment in this way.

It would require a sea change to revert to these customer – banker realtionships but it is the only answer. Customers are there to be advised [properly] by experienced people who have trust each other. How the world has moved on [badly] because of accountants thinking that they know better.

I remember Stan’s employer and the USA investment as I was with another clearer then and the CEO was addressing us as managers at our staff college and indicating that a “lifeboat” was being prepared for that situation.

Your comments took me a long way back but to days when a bankers word was his bond.

No one will ever know the suffering and the poor quality of life these evil institutions have caused, lost homes, lost jobs, lost self esteem all in the name of greed

Tummy says:
28 October 2012

It’s not about striking off individuals, it’s about breaking the stranglehold that the banks (and insurers) have on this country, and on all western economies. They know they can do as they wish because we are too scared all will collapse if we dispose of them.
What other industries could practise fraudulent business ( PPI sales, up to 10 days to clear cheques, penalty clauses which make them huge profits) and when found out are (at worst) only made to repay those cheated customers who realise they have a claim and feel empoŵered to process it, faced no punishment for their fraud, and were allowed to carry on to their next mis-sale, or profiteering charge.
And of course, while they are apparently an integral and irreplaceable part of capitalism, government will continue to recognise and ignore the wrongdoing, but what do the rest of us get by way of service? I know, the opportunity to borrow money we neither really need nor can afford, and nothing to be had when we need a helping hand. Businesses lent money which is then hauled back in as soon as times get slightly tough, and there is the slightest hint that the bank might be at risk. But isn’t that what they get paid very good interest for – to take a degree of risk?
And as for insurers… Amazing ability to put spin on their own abuse of their customers by selling the customers’ private information in return for referral fees, and then complaining about the growth in the ‘compensation culture’. Oh, do they mean people claiming against policies for the meagre compensation allowed in the UK for unpleasant injuries caused by some driver’s faulty driving? Yes, there are very few true accidents, almost always someone has been careless or worse. And if you think it’s wrong to claim for a whiplash, try suffering one for ( on average) 18 months.

Andrew Hobson says:
29 October 2012

I have been with most banks in by business life, and my experience is that they are all alike.

They are not trustworthy, they tell lies, they continually move the goalposts.

They damage your business for their own ends.

They only survive because they are in a monopolistic business, with years of experience and top lawyers to look after their interests. Often at the customers expence.

They are not interested in long term relationships, they know if you move on you are just on the roundabout

Andy says:
29 October 2012

I applaud the Which “Big Change” campaign
Although there are skeptics as to if it will make any difference,Great oaks from little acorns grow,springs to mind.
That said I wish they would run a similar campaign in regard to the Insurance and pensions industry.
I have spend the last month trying to get quotes for my Car insurance renewal
Using comparison websites are of little use, as there is no standardised master template where you can select the cover you require.
Some details are taken but invariable you find that you are bombarded with quotes which tend to give eye catching low premiums only to fall short in the cover you asked for.
I have just spend an uncomfortable 27 minutes with the AA,after deciding they were the best on my short list, they intimated that they had all my details and still it took 27mins to process.
First you are informed that they cannot advise if a product is suitable for your requirements and then proceed to advise that you that the policy includes a total of £400.00 in excesses which you can cover for an additional £41.00, my head started to spin, this payment did not remove the excesses,it was a secondary policy.
You are getting free beak down cover,how about relay for £61.00 and Home start for another £61.00?
We will give you 6 mnth free Home Emergency response ,Blah Blah Blagh on and on it went.all products were auto renew,I asked if I could opt out of auto renew ,No its a condition of the free cover ,another sharp practice.
If the strategy was to wear you down it certainly was working.
I was at the point of hanging up but realised I would have the same carry on with each and every company.
Trying to get a like for like insurance quote is a minefield,come on comparison websites please standardise your template.
Sorry, know its not banking but I have made my views on that here already,I just had to get this frustration off my chest.

Andrew Lewis says:
29 October 2012

This is in response to Andy’s comments re. the problems of getting insurance cover. Firstly let me say that I have no connection with the insurance industry, I am just an ordinary guy who tries to keep insurance costs as low as possible whilst still ensuring that I get appropriate cover with a reputable company. My background, incidentally, is investment.

I prefer to use an insurance broker as they are very useful in the event of a claim. Personally I have used Swinton for a number of years. I always do my own investigations after receiving their renewal quote, both on-line through comparison web-sites and by direct ‘phone calls. The result, invariably, is that, surprisingly, they then manage to match or usually beat all other quotes. Swinton also operates a cash-back deal. It usually means that you take out a monthly paid premium and then get up to 50% cash back after 90 days. This has kept my comprehensive car insurance, with all bells, hoots and whistles, well below ₤250 a year. Another tip is that if you stay with one broker for at least a year they are very keen to keep you as a customer, (they are invariably targeted for retention), and this gives you even more leverage.

Now to breakdown cover. I have used AutoAid through Boncaster Insurance Services for a number of years. The premium is just ₤36 a year. It includes home start, for yours or any other car, away from home repair or take you and up to five passengers to a place of your choice or alternative travel to finish your journey or return home etc. It doesn’t include taking your car home but, hey, what do you expect for just ₤36. You can also add in Europ Assistance for an equally competitive premium. The premium has hardly moved over the last few years. The only difference with other covers is that you pay at the time and claim back from AutoAid. Over the years I have claimed twice. Once a claim away from home and once for my partner’s car breaking down at my home. I both cases I put in my claim and received a full refund within 10 days.

Nothing else to add. I hope this is useful.

Andy says:
29 October 2012

@ Andrew Lewis
Hi and I appreciate the info
I have used a broker in the past, and thanks to your reply perhaps I need to consider doing that again in a years time,after my experience today I doubt I will renew with AA next year.

Quote”Another tip is that if you stay with one broker for at least a year they are very keen to keep you as a customer, (they are invariably targeted for retention), and this gives you even more leverage”Quote

Unfortunately due to Auto renew you have no choice but to contact your current provider to cancel, and get the hard sell
Yes you are right, by magic they can suddenly match or improve their quote, or give a discount.

I usually give them short shrift, citing that I should have been given the best price in the first place,and any case invariably I have renewed with someone else.
You are then asked who was cheaper,and at what price, my reply is that it is customer sensitive information (after all I have not just spent a Month being bombarded with emails posts,searches etc just to give them competitor advantage)
I never participate in surveys as I feel no matter how innocent the info is,it is dissected and sold to different agency’s and used to my dis-advantage

Andrew Lewis says:
29 October 2012

I understand all those frustrations. I have time on my hands and my over arching desire is to reduce my premiums as low as possible. Yes, it does open one up to some unwanted approaches, but that is the penalty for the delights of being able to use the web to one’s advantage. You can always tell them to p**s off. Keep focussed on the fact that you are in charge and want to keep premiums as low as possible. It’s a game and play your cards right and you can be the winner. Keep positive and think of the savings.

I’m glad I took voluntary redundancy from the Halifax many years ago. The top managers bully boy tactics were starting to take hold then and staff even now are still being bullied (although they don’t call it that!!), into meeting their targets for selling products that the customer doesn’t want. Many staff want to go back to what they were originally employed for and that is to give CUSTOMER SERVICE. Forget the targets you bullies at the top and listen to what your staff and customers want – a DECENT HONEST banking service. Its called BACK TO BASICS and TREATING YOUR CUSTOMERS THOUGHTFULLY

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