Banks-the Mis-sale Of Bank Products

house1_2 · 1 February 2009 at 11:33AM

Essentially, there's nothing wrong with the products themselves. It's the reason that they are 'sold' (not bought) that's the problem. Bank staff are appraised using a performance management method known as 'Management by Objectives'. In other words individuals are given targets to reach in terms of the number of products sold. This target is used as a stick to intimidate/threaten individuals with disciplinary measures. The other side of this is the carrott-a cash bonus for achieving targets. It is this combinaton of stick and carrott that leads individuals to act/behave in a disfunctional manner. That is 'sell' products to achieve targets rather than meet customers real needs.

For example, take the packaged accounts (EG, RBS-ROYALTIES) which incurr a monthly fee. The features of these packaged accounts are fairly reasonable and may represent value for money for some customers-however this product is sold universally to everyone. Why? Well not because they are value for money for everyone, no! The product is sold because of the stick/carrott combination. The same applies to the sale of stock market related products by 'Financial Advisors'. Advisors are under pressure to achieve targets (because of the commission income paid by fund managers to banks) and during the course of a customer interview it is only human nature that the stick/carrott combination leads the Advisor into persuading the customer to sign on the dotted line. Is there ever a bad time to invest money on the stock market-not according to Advisors (who are told by the Banks to churn out certain mantra's)-i.e when the stock market has plummetted then 'it is a great time to invest-you will get more units for your pounds' and when the stock market is riding high-'look at the performance of the market in relation to your savings account- if you would have invested £x just a few months ago you would have made £x more pounds'. Advisors are under too much pressure to sell and on very many occassions customers have felt persuaded (despite the cooling-off periods) to pile their money into these products. The customer protection regulation in this area is just not good enough. There is an awful lot of anecdotal evidence out there to prove this.

Anyway my point/aim is, and it is my hope that others will get behind me, to change the way in which Banks assess the performance of staff. Management by Objectives should be outlawed in it's present format-targets/sales tactics should be overviewed/scrutinised more closely by the FSA and more emphasis should be placed on an individuals qualitative contributions and more importantly the real needs of customers rather than the generation of income/profit for the Banks. Obviously, greed (and look at the mess we are in now-because of the greed of the executives of banks) is at the heart of this and at ground level this is one thing the FSA/Govt can do to help to curb it! Your comments about this are welcome. Thanks for reading.

Hazzanet · 1 February 2009 at 12:55PM

comment

I agree with some of what you say, and I think my advice is caveat emptor or buyer beware.

I know that if I walk in to Phones 4U I'm going to be 'sold' a mobile phone and a contract regardless of whether I want one, or whether it's appropriate for me to have one. If I walk into a bank (or rather a financial services shop), I expect to be sold financial services, again, whether or not I want them, or whether or not they are appropriate for me.

My advice is to just say no, and go away to think about it.

Extant · 1 February 2009 at 1:01PM

no

No. This would represent far too much government interference in the market place. Consumers are more than capable of saying no.

Do you propose that such a ban extends to every seller in every industry?

house1_2 · 1 February 2009 at 1:28PM

yes

Customers have been ripped-off through mis-selling, whether it be in the financial services sector or elsewhere. It is my experience that a lot of honest but perhaps naive people don't have the where-with-all to make value judgements about features/benefits and it is these people that need protecting. I don't think that it's good enough nor fair to simply say 'let the buyer beware'. Yes I do think that the revision of Management by Objectives should include all sectors where anecdotal evidence of mis-selling exists. Selling is an essential part of a successful economy-mis-selling isn't and employee's should not feel intimidated into acting/behaving in this way.

Aegis · 1 February 2009 at 1:40PM

no

When all's said and done, banks are a business. Businesses have objectives, and targets set for all employees. When you're in a role that requires selling anything, those objectives must include sales targets to give any meaningful goals for those employees. I think a ban would just curtail the ability of banks to ensure that their staff are performing as expected.

Yes, there are problem salespeople in banks, but these individuals exist in all industries. Feedback after the event will be investigated, and this is the best way that you can get rid of these problems, as unsatisfactory resolution can eventually lead to Ombudsman involvement, and banks tend not to like that.

Ambre_Solaire · 1 February 2009 at 1:55PM

yes

I have just discovered that my 82 year old Mother has been paying £7.95 monthly for a Lloyds TSB Select Account. I went into the Branch and they could not confirm how long she has been paying this fee, could have been 10 or more years. I intend to challenge the Bank regarding the mis selling of this account to my Mother.

My Mother is terminally ill, has little money, does not own a property, has never owned a car, or mobile phone, does not travel and cannnot afford insurance, before anyone informs me the perks of having such an account.

Do you think there is any chance of getting these fees refunded ? If so how should compose the letter ?

Any help appreciated.

opinions4u · 1 February 2009 at 2:03PM

no

Ambre_Solaire wrote: »

I have just discovered that my 82 year old Mother has been paying £7.95 monthly for a Lloyds TSB Select Account. I went into the Branch and they could not confirm how long she has been paying this fee, could have been 10 or more years. I intend to challenge the Bank regarding the mis selling of this account to my Mother.

They will have no records that date back that far that support the quality of the sale.

My Mother is terminally ill, has little money, does not own a property, has never owned a car, or mobile phone, does not travel and cannnot afford insurance, before anyone informs me the perks of having such an account.

I wish you well with the difficult process of caring best for an elderly parent.

Do you think there is any chance of getting these fees refunded ? If so how should compose the letter ?

You can certainly ask the question.

But I would ask this question back:

"Why did you or your mother not challenge the £7.95 a month charges sooner?".

The bank have certainly never had grounds to stop the charge have they? So they will have had to pay their insurers for the cover provided out of the premiums collected, even if Mum hasn't taken advantage of this.

On the wider issue of selling, banks need to be able to sell. Simple as that. The right products for the right customers at the right time. A pretty close form of regulation already exists for this.

On the subject of packaged current account, I would propose an annual renewal letter confirming that the account is continuing and headlining what is (or isn't covered).

But I would be surprised if your Mum hasn't had something telling her of changes to her package at several points over the last few years anyway.

Extant · 1 February 2009 at 2:12PM

no

house1 wrote: »

Yes I do think that the revision of Management by Objectives should include all sectors where anecdotal evidence of mis-selling exists.

Anecdotal evidence, however, is no basis for making or changing laws. Although there is no excuse for mis-selling, some anecdotal evidence gathered does not mean it is any sort of real trend or even remotely representative of any of these industries as a whole.

To say the law should be changed because of a few bad apples is ridiculous - should we ban alcohol because a few people will abuse it and then drive? No, of course we shouldn't.

Selling is an essential part of a successful economy-mis-selling isn't and employee's should not feel intimidated into acting/behaving in this way.

So you admit that selling to a customer need is a key part of a successful market economy, but you feel that selling shouldn't be to a target or goal. How else then, do you propose that you measure sales?

If anything, the better solution to mis-selling is to put in place better regulation of sellers, not how they sell or how they're measured. Put greater emphasis on the seller to evidence the sale as being relevant or useful to the customer.

Extant · 1 February 2009 at 2:21PM

no

Ambre_Solaire wrote: »

I have just discovered that my 82 year old Mother has been paying £7.95 monthly for a Lloyds TSB Select Account. I went into the Branch and they could not confirm how long she has been paying this fee, could have been 10 or more years. I intend to challenge the Bank regarding the mis selling of this account to my Mother.

If this account has been open in this form for possibly ten years or more, how do you know it was mis-sold?

Do you think there is any chance of getting these fees refunded ? If so how should compose the letter ?

As said already, the return challenge is going to be why haven't the fees been challenged before? She, or someone responsible for her affairs, has surely been receiving her statements for these past ten years?

If anything, you're just going to look like you're chancing it.

Ambre_Solaire · 1 February 2009 at 2:22PM

yes

Many thanks for your prompt response. My Mother left school at 14 and did not receive much of an education and she holds Doctors, Bank Managers and the like in the highest esteem. So I presume when she went into the Bank to withdraw my Fathers small monthly pension, someone may have told her about "this wonderful account YOU can have" I did not have access to any of my Mothers finances until the last few months when I opened a Bank statement and noticed the £7.95 monthly fee. She is now unable to leave the house because of her fraility, my Mother also suffers from Dementia, so it is sometimes difficult to try and have a conversation with her especially regarding finance. Obviously my main concern is her health, but I thought if I could obtain some of the fees back from the bank, it may make her life more comfortable.

Regards

Extant · 1 February 2009 at 2:34PM

no

Ambre_Solaire wrote: »

Many thanks for your prompt response. My Mother left school at 14 and did not receive much of an education and she holds Doctors, Bank Managers and the like in the highest esteem. So I presume when she went into the Bank to withdraw my Fathers small monthly pension, someone may have told her about "this wonderful account YOU can have" I did not have access to any of my Mothers finances until the last few months when I opened a Bank statement and noticed the £7.95 monthly fee. She is now unable to leave the house because of her fraility, my Mother also suffers from Dementia, so it is sometimes difficult to try and have a conversation with her especially regarding finance. Obviously my main concern is her health, but I thought if I could obtain some of the fees back from the bank, it may make her life more comfortable.

Regards

Whilst I am sure everyone can appreciate the difficulties of such a situation, you must surely be able to appreciate that claiming mis-selling after so many years of the charge being unchallenged is going to be seen as slightly dubious.

I don't doubt that you could get some of these fees back if approached correctly, but I would ask them to provide any records they had of the sale, rather than just claiming it was mis-sold, and go from there. You might be able to negotiate a partial refund as a gesture of goodwill in that case, rather than just having your claim outright refused.

Banks-the Mis-sale Of Bank Products

Should management by objectives (in it's present format) be outlawed? 16 votes

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