/ Money

Five years on – have banks learnt their lesson?

Banker in front of blackboard

Do you remember life ‘PFC’ – that’s pre-financial crisis. If we asked a producer to plot a script for how the financial crisis would unravel I don’t think in my wildest dreams it would lead us to where we are today.

Yes, today it’s five years to the day economists widely regard as the start of the financial crisis. It’s not exactly cause for celebration but perhaps an opportunity to start afresh?

It’s been a rocky journey. Take a handful of collapsed international banks; mix with bail-outs costing the British taxpayer hundreds of billions of pounds and a sprinkling of rate rigging and you’ll find a rather sour tasting banking dish.

Libor interest rate rigging

Do you believe we’re over the worst of it – have the banks themselves changed enough? Our research suggests not, as 71% of people said they didn’t think that UK banks had learnt from the crisis.

Who can blame us for our lack of confidence? We’ve faced a series of scandals that seem to have uncovered a broken culture and deep mismanagement in our banking sector. We’ve seen widespread mis-selling of Payment Protection Insurance (PPI), which is on course to be the biggest financial scandal of all time, and more recently, revelations of Libor interest rate rigging and IT failure at NatWest to name just a few.

There’s a parliamentary inquiry on banking standards underway but few people appear hopeful that things are going to get better. In our survey only 26% said they were confident the inquiry will lead to positive changes to our banks.

We need to ensure banks are efficiently regulated but we also need to address the fundamentally flawed banking culture.

Service not sales

Which? is calling for the inquiry to tackle the culture in UK banking and increase competition in the market. Recently we’ve seen some challengers coming into the market to try and disrupt the dominance of the big banks, Tesco being the latest example launching it’s new mortgage offering this week, but is this enough?

Will we see a significant enough change in culture that means we will see staff prioritising customer service, not sales? What do you think needs to happen to make sure that our interests, as consumers, are at the centre of banking reform?


No. They rely too much on computers, look after themselves too well and don’t given enough customer service.

We recently moved a large amount of money from one bank to another and were staggered to find that the receiving bank didn’t bother to notify us and we were doing all the running. In the past we would have received a phone call or a letter confirming receipt. They have become lazy and hide behind a Data Protection excuse for as many things as possible and should know which of their customers don’t and are unlikely to use internet banking and look after them better. They spend enough time collecting data.

Beside us at the counter were another elderly couple having problems navigating their way through all the restrictions. Mattress banking where are you? I sometimes wonder whether it is worth the hassle using a bank. They have forgotten who the customer is.

This will only lead to more problems on the inside rather than the outside. It is like squeezing a balloon.

Banks have learnt albeit nothing that’ll help the person on the street. Take the fact that they now aren’t lending to anyone who asks, they were never like that. So they’ve gone from one extreme to the other.

And I’m sure there are more scandals waiting to be exposed.

The lesson that I think they need to learn and they never will, is “The customer is King”.

And even with all the political posturing I don’t believe the new regulator will be any better than the previous shower, so nothing learnt there.

I can’t see much improving unless there is a change of attitude toward ethics and standards. The culture of greed and lack of moral fibre remain. Without change in these areas, new regulations will just become a barrier to circumnavigate. They will learn from the crisis. They will learn not to get caught and to find new ways to extract money for poor value and unnecessary products.

Absolutely right. Unfortunately there will be no significant change of policy, there will be a lot of rhetoric and you will get one or two heads that will roll (with the cushion of a golden handshake, or if that may raise too many eyebrows, a juicy backhander) but they all socialise, meet formally and informally with each other and do whatever else that is needed to stabilise, structure and generate financial security for their inner sanctum.

Phil says:
9 August 2012

Not forgetting HSBC being up to their necks in money laundering.

What’s required isn’t another inquiry but a tribunal with the power to interrogate, investigate and punish.

No they certainly have not!
I had an appointment last week with Lloyd’s Bank, at their request, to discuss my savings.
When I arrived for my 10:00am appointment I was kept waiting for 20 mins. Then when I eventually spoke to someone she said she was not able to be of much help as she did not have all the details needed.
What a way to treat your customers!

No – of course they haven’t – They won’t until they are properly regulated and monitored – Then heavily fined for any transgressions – not vast bonuses for nothing and no punishiment.

Frank says:
9 August 2012

What is so sad is the thousands of bank employees willingly (or perhaps unwillingly) defrauding (eg.PPI) their fellow citizens. Of course I understand that many people need the work.

Also tragic is the armies of marketing folk spending their days devising the schemes and advertising to sell this stuff.

If you have any influence over the next generation, urge them to choose a career in which at the end of each day that can say, at least, I did no harm to anyone today.

The letter in the August edition from the customer who was told that he would have to open a new account in order to access funds in a dormant account says it all. This was not ‘confusion’, but clearly a blatant attempt by the bank employee to get the customer to open an account, for which he/she would get points towards their bonus. Lloyds TSB should discipline the employee and check to see if anyone else has been conned in this way. Two other points:
1. It’s outrageous that fines imposed on banks by the FSA go back to the FSA, thereby reducing the levy the banks have to pay next year. The money should go to the Treasury or even to one of the lottery funds, where ordinary people can benefit from the money.
2. Consumers need more information about banks’ IT systems. Are they running at full capacity or is there performance to spare? What fallback facilities are in place if the main system fails or there is a disaster such as a flood, and how quickly can they be deployed? Has development and/or operations been outsourced abroad? Even if a more personal element is brought into customer service, banks will still rely on their accounting, counter and other systems for the nuts and bolts of banking.

If you want a good giggle add

3.) What’s the Operating system, age and make of the various computers being used.

My money is on really ancient stuff like AS/400s which 1st saw the light of day in 1988.

You sound like an IT person, William!
I worked in IT for a bank whose main accounting system was nearly 30 years old but until recently (when they outsourced development to India and I got my early retirement!) it was very reliable because it was maintained by people who had worked on it for years and knew it inside out. Those people’s skills were very specific, so they tended to stick around. The Indian staff who took over were competent, but they were also young and ambitious. A few months after I retired, I got an e-mail from one of them asking for a reference, as he was leaving the Indian consultancy to study for an MBA. What happened to all the knowledge I had passed over to him???

@Jenny, Financial Software, does that count as IT ? And I see you experienced the joys of outsourcing. The company I worked at tried outsourcing to India, but that was a disaster. So they then went to Thailand. They had an almost 50% staff turnover at one point. Young grads won’t stay in one place long when the next company pay doubles their pay. But they are still cheap compared to UK wages. And yes my job appears to have gone the same way as yours. Although mostly down to having an army of young grads ( almost 1500 which was 4x the size of the whole UK outfit)) who didn’t quite understand things turning out poor quality software that the clients refused to pay UK rates for, so they walked.

And sorry for being off topic everyone else

What lesson do you expect them to learn? They’re not a public service. They’re not there out of any altruistic motive. There only reason for existence is to make money for their shareholders, nothing else. They can only achieve this by doing what they do at minimum cost. That means the lowest possible level of service they can get away with, the highest charges the market will stand and selling things you don’t need or want.

The political establishment has no stomach for any serious attempt at regulation: the economy is far too reliant on the finance sector. We are all too aware of what happens when it goes wrong. Only a mass move to mutuals will show the banks that consumers will put up with them no longer.

I see the new Chairman of Barclay’s is someone who hasn’t learnt anything over the past 5 years. Trying to blame the public for the shambles when we all know its the overly greedy attitude of the banks that is to blame. And suggesting that we should all pay for our bank accounts too, do we really think they’ll change if they did charge, I don’t.

Derek says:
15 August 2012

It should be clear to us all that in spite of protestations that bank chief executives have to be very special people commanding extraordinary salaries and bonuses … the average bin man could barely have done worse than the highly paid characters who were in charge in 2008.
The banks should be ashamed of their attitude to customers and the government should be ashamed that they will not grasp this nettle.
How is the country to get out of the recession if the Government / Bank of England lend money – tax payers money – to the banks at very low interest rates and the banks lend to business at extremely high rates, plus all sort of charges ?
Please Mr Prime Minister take serious action and tell the banks if they do not do better they will be taken over or nationalized without any compensation! But alas that would be equivalent to creating yet more quangos. God forbid.

Of course they haven’t learnt any lessons but neither have our MP’s – it’s all pigs noses in the troughs at our expense isn’t it. Banks and the government are closely knit – they wine and dine together and give enormous donations to whichever political party is currently in power in order to have no laws passed that would cause them any problems in their day to day ripping the customer off. Look at Wonga – legalised criminality if ever and of course the owner of Wonga is a close friend of who? and which law didn’t get passed recently? Oh yes, the one that would have meant extortionate interest rates could no longer be charged. Time for a change in who we all vote for – stop voting for the big 3 parties – they are all corrupt to the core.

Banks are above the law anyone one else would be taken to court for what they have done .
Until they make fleecing customers a criminal offence they will continue to do so fining them is a joke as its the customers who end up paying the fine not the individuals responsible.

Victor says:
16 August 2012

Not only have the bankers learnt nothing, but we have poachers turned gamekeepers setting up the enquiry and no doubt cherry picking what to disclose sometime in the future.
Apparently bankers like politicians are guilty of no wrongdoing and will not be subject to the same laws as the rest of the population. Those who are supposed to be an example to us all are sending out the wrong message. It will take many years to sort out our current problems and we must be careful not to let our guard down. Keep your money in a sock under your bed, the odds against it being stolen by a burglar are small compared with the almost certain theft by the banks, financial institutions, insurance companies et al.

Daphne Mueller says:
16 August 2012

Like others, I cannot believe that banks we own, are still able to pay astronomical bonuses, for buying and selling something that is worthless. They believe they work hard and long. I believe I have always worked long and hard, funnily enough, I do not have a million pound bonus.

Emmm says:
16 August 2012

They haven’t really learnt anything – rather, they’ve had it confirmed that they can bankrupt entire countries, and then buy their assets at knockdown prices (Greece has had to sell one of its harbours; etc.). This is a fine example of what young Miliband called ‘predatory capitalism’. Of course, there is no other kind – only a matter of degree.
I am somewhat disappointed with the genteel approach that Which? takes towards so many instances of what amounts to criminal activity by so many businesses. They should be sued on a regular basis in Courts, with Which? providing legal support to individuals, and also suing on behalf of its members/consumers.
But maybe Which? is constrained by the government in some way – how about a comment from you?

patrickq1 says:
16 August 2012

The Banks are not concerned about the mass as they are a law unto themselves , they are above the Law to many ex and current Government Ministers do part time work for them ,as advisers etc, we need to see a law that Bans Lords and Barrenness and Government Ministers from being concerned in any fashion whatsoever no matter how they dress it up as advisers etc.. or if they wish to join Banking and Finance they cannot for a period of 5 years ,also the law needs to address Banking and Auditing must take place the Auditing must be done by the Government Special Tax accountants , this way we can see if the Banks are paying their fair share and being honest in their bushiness

The banks are a law unto themselves, there’s a lot of huffing and puffing when another crisis within the banking system hits the headlines and one or two heads roll to placate the public, but there is no politician who will stand up and do something constructive to bring the banks into line because they all share the same standards and lack the backbone to criticise the hand that feeds them (even if it is from the back)

Armands says:
18 August 2012

Scandal after scandal – the answer is no, no and no, they have not learned anything at all. Banking industry is living their own separate lives where profit is “the boss” and no matter what measures will be taken, industry will find loop holes and new ways to cash in. This Bank of England QE – has anyone seen an impact, do banks lend under reasonable rates? The latest absurd about PPIs where banks were saying that if there would not be free banking PPIs would not be mis-sold is another fiasco in their statements. As some comments above suggests – “computer said no” – and to me that is a proof of deep centralisation and profit planning where there is non-existing, real customer care and service. Profits, however, should be healthy but they should be made in ethically correct manner. Banks are in need in greater regulations, perhaps, worldwide. The question would be open – who would be able to take that responsibility? Another thing is credit rating agencies (CRA) – this is a big business on its own. Banking industries computers+ CRA = poor judgements and poor service.

Roger Bruton says:
18 August 2012

Currently bankers, quite rightly, rate well below estate agents in popularity. Indeed many people think the b should be replaced by a w. Several years ago when dealing with my late father’s estate I had to deal with a brash, wide bracered, shirt sleeved young man whom I would not have liked to meet on a Friday night so transferred my own to the Co-op which I find much more helpful.

No bank “executive”, no matter how good, should get either the high salary or horrendous bonuses they currently do. Serious government action is needed to control them but I doubt the “posh school boys” currently running the country will do anything to seriously control their friends.