The UK High Street Banks – Are Olympic Standards Possible?

Olympic FlagWow!

They were incredible events weren’t they?!

The Olympics & Paralympics proved to be absolutely outstanding, surpassing the expectations of even the most enthusiastic supporter of these events.

Listening to people on TV & radio, and chatting to friends, all talk was about the bravery, sheer excellence and wonderful spirit amongst the athletes.

The helpers helped superbly, the audience cheered and clapped their hearts out and even the weather did everyone proud for virtually the whole games!

Now, a few weeks later, and like all great events and occasions, the memories fade a little, but that overall feeling that we are much the better for experiencing these Olympics is still there.

So why do you think they made such a profound and deep impression?

Various theories have been put forward, but I think that it is basically very simple – we have got used to low standards.

Low standards of behaviour and performance and in many cases a total lack of integrity from those we encounter day to day or trust to exercise power on our behalf.

Whether it is MPs, bankers or premiership footballers, we have become very cynical and understandably so, as we find out what they get up to.

So encountering events which are the very opposite of what we are used to is incredibly refreshing.

Asking around I heard words such as:

Dedication – honesty – integrity – effort – skill – endurance – camaraderie – modesty – values – leadership – genuine – being the best you can be.

So I had these very much in mind when I was looking at a subject to write about for Financial Tips this month.

There were two recent surveys that stood out and they particularly resonated because they jarred with the values of the Olympics.

The first survey was by the Financial Services Authority (FSA) into the sales practises of banks.

It found 20 out of the 22 firms assessed had features within their incentive schemes that increased the risk of misselling!

In an article in New Model Adviser, it showed that the failings included:

  • Firms failing to identify how incentive schemes might encourage staff to mis-sell, suggesting they had not properly thought about the risks or simply turned a blind eye to them
  • Firms failing to understand their own incentive schemes because they were so complex, therefore  making it harder to control them
  • Firms relying too much on routine monitoring of staff rather than taking account of the specific features of their incentive schemes
  • Sales managers with clear conflicts of interests, such as a responsibility to manage the conduct of sales staff whilst themselves able to earn a bonus if their team made more sales
  • Firms not doing enough to control the risk of mis-selling in face to face situations.

The FSA cited a case where one firm worked on a ‘first past the post’ system in which the first 21 sales members to reach a target would earn a ‘super bonus’ of £10,000.

Another firm grossly incentivised one product over others despite claiming to offer impartial advice and allowed the risk that its advisers would sell the product that earned them the most.

In another case it found a firm offered sales staff a 100% bonus of their basic salary if they sold payment protection insurance to at least half their customers.

Perhaps a good summary came from MoneySavingExpert.com founder Martin Lewis, who has argued that problems within banks’ sales cultures go beyond incentives and stem from poorly trained staff “dressed up as advisers” who do not have the “moral compass” to know they are misselling.

Not Olympic standard then!

The second survey was also about banks, but this time into their overall customer service, and was carried out by Which?

The following shows their findings of the financial brands ranked by their customers showing ranking & overall score:

1)  First Direct – 86%
2)  The One Account – 80%
3)  Co-operative Bank – 79%
4)  Smile – 78%
5)  Coventry Building Society – 74%
6)  ING – 74%
7)  Saga – 71%
8)  Nationwide – 69%
9)  Yorkshire Building Society – 69%
10) Marks & Spencer – 67%
11) Intelligent Finance – 65%
12) Britannia – 64%
13) Tesco Bank – 63%
14) Yorkshire Bank – 61%
15) Sainsbury’s Finance – 61%
16) HSBC – 60%
17) AA – 60%
18) Cheltenham & Gloucester – 60%
19) Post Office – 60%
20) Virgin Money – 60%
21) Cahoot – 59%
22) Clydesdale Bank – 57%
23) NatWest – 56%
24) Barclays – 54%
25) Lloyds TSB – 51%
26) Northern Rock – 51%
27) Royal Bank of Scotland – 50%
28) Bank of Scotland – 49%
29) Halifax – 48%
30) Santander – 46%

Average – 62%

How has your bank done?

Which? summarised by saying:

The findings come ahead of the launch of a major new Which? campaign calling for fundamental changes in banking culture to put customers first.

Richard Lloyd, Which? executive director, said:

“Consumers are constantly being let down when it comes to customer service. This is not good enough, we want to see fundamental changes in the culture of banking and a return to banking for customers, not bankers.

Our survey shows that those banks that go the extra mile to keep their customers happy are rated far higher than banks who may offer slightly better products or interest rates.

All banks need to start putting customers first”

Read the full article here.

So, even though the results are not a surprise to most of us, coming after such a positive uplifting Olympics, it leaves a much worse taste in the mouth.

At the same time, the results in the table can be viewed with the glass half full and those banks with scores above 75% show that many customers do rate and like dealing with their bank.

No one is perfect of course, but a bit more of the Olympic standards would be most welcome.

Key Considerations

Think very carefully about using a bank for financial advice. At the very least get a second opinion.

Even on the most basic of services such as a current account, it is worth checking alternatives.

Action Point

If you have any doubts about any advice or products that you have taken from a bank, then it is vital you at least review your circumstances with someone who is totally independent and impartial.

At least then you’ll have the peace of mind knowing that you’ve checked. 

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About Graeme Urwin

My passion is to help senior doctors and dentists organise their finances to create their own strategy to achieve their goals in life. I do this impartially as I charge fees. Outside of work the words that best describe me are: family man, squash, badminton, jogging, travel, reading, archaeology, genealogy, writing a book on Robert the Bruce. I live in the hills of Northumberland in Rothbury and believe in living the life you love.