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MSE News: Watchdog cracks down on mis-selling inducements

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MSE News: Watchdog cracks down on mis-selling inducements

edited 30 November -1 at 1:00AM in Budgeting & Bank Accounts
9 replies 2.1K views
2.4K posts
edited 30 November -1 at 1:00AM in Budgeting & Bank Accounts
"Large incentives to sell certain products have led to a plethora of scandals such the £10billion+ PPI racket ..."


  • JimmyTheWigJimmyTheWig Forumite
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    predominantly driven by how much they can earn for themselves and their firms, rather than the needs of their customers.
    You can legislate to stop the explicit incentives to the sales staff, but you can't legislate to stop the process being driven by profit to the company.
  • The difficulty is in retail banking (where I used to work) you're not talking about fat cats and huge bonuses. If banks remove these incentive schemes, they won't replace that income any other way. It would be like suddenly stopping tips for waiters.

    I do believe that the majority of staff want to do the right thing, and wouldn't intentionally sell something that would be of detriment to the customer. Indeed there is much lip service paid to "selling to need" rather than just flogging whatever you can.

    The problem comes less from product-led bonus incentives, which are (in my experience) not significant enough to affect recommendations. BTW the examples called out in the article are quite far removed from the scheme I experienced 3 years ago in one of the big high street banks.

    The issue is more the immense pressure to hit aggressive sales targets which is placed on the branch managers, which then feeds down to shop floor staff (branch performance fed into bonuses too btw). This can leave branch staff stuck between the corporate message of 'selling to need' and 'customer trust', and the grass-roots pressure of being 50% down on the day's targets on a quiet Saturday, leaving them having to choose between doing the right thing by the customer or succumbing to the pressure of their frazzled boss and colleagues to sell sell sell.
  • edited 5 September 2012 at 2:22PM
    Pinner_RamPinner_Ram Forumite
    49 posts
    edited 5 September 2012 at 2:22PM
    I joined NatWest in 1981.

    Having been on the inside (having worked in Retail, Commercial, Corporate and Investment banking) I believe that the major failings, that everyone now sees, started back in the early 1990s.

    This was when the banks stopped recruiting people and training them as bankers and started recruiting "proven" sales people from other retail industries.

    This move was compounded by the "Yes" men and women at middle management level, they "sucked up" to their bosses and gave the staff on the ground floor a very hard time on sales targets. Guess who got the bonuses?

    In 2006 I left banking behind and have never looked back although I did suffer a financial loss due to the sharp fall in bank share prices - since then I have focused more closely on a diversified investment portfolio (self managed).

    Currently, loyal, long serving, bank staff of integrity, are being "managed out". Targets are deliberately being set at unrealistic levels (leading to customers being pressured to buy products they do not need/want) and when those targets are not being met the (higher paid) staff are being sacked on the basis that they cannot do the job (unreasonably) asked of them.

    I believe that some of these people are suffering tremendous stress and I know that many have lost all their savings due to the bank share price collapse as many held all their savings in bank shares, they were that loyal and perhaps, in some cases, a little naive. I hope the Samaritans get there in time as I fear some of these people will be very depressed.

    I also fear that the current UK banking culture will be hard to reverse.

  • RafterRafter Forumite
    3.8K posts
    Banks have got wedded to the 'cross sell'.

    Rather than charging enough for loans and mortgages to cover the cost of running branches and providing friendly well trained staff they have ended up in this mad situation of selling rubbish dressed up as 'investment' or 'insurance' that is usually not in the interests of the customer or more expensive than they could get elsewhere.

    Hopefully these new rules will sort it out, but it probably does mean in the short term even more branch closures and job losses.

    In supermarkets or shops 'bad' products would either be banned for being unsafe or you would be able to return faulty goods for a refund. Products that are bad for you (cigarettes and alcohol (in excess)) carry health warnings.

    Banks should really be subject to the same rules then perhaps consumers would trust them and the products they sell would genuinely help customers manage their financial needs!

    Smile :), it makes people wonder what you have been up to.
  • ConsumeristConsumerist Forumite
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    Yes, we've heard this all before.

    What you expect, Mr. Wheatley, and what you get from financial institutions, particularly the powerful banks, will be vastly different.

    Any regulation you may applying will be got around before you've even finished consulting. You must consult but financial institutions consult no-one.

    Dream on Mr Wheatly, we won't be holding our breath for a fair deal from banks. If you don't want to suffocate then I suggest you take your promises with a large pinch of salt. I do.
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • Part of this also comes down to how we expect the services we enjoy and take for granted - my 24x7 internet and telephone banking, iphone apps, a comprehensive ATM network, ability to use ATMs belonging to another company, a branch when I want it, even if I don't use it, open 6 and preferably seven days a week, with highly trained and knowledgeable staff, plastic cards and cheque books that are replaced for free every time I lose or break them, statements sent in the post every month and whilst not forgetting my ability to complain to a regulator, ask my bank to sort out a refund on my debit card ro sort out direct debits every time another company I deal with lets me down, pay up on section 75 claims and so on. But this does cost money and we use our accounts a lot more than we used to get under Captain Mannering banking (not forgetting in the "good old days" many were socially excluded from banks because the manager didn't think they were of appropriate standing). So perhaps it's time for a more grown up than bank bashing debate about how we seriously expect / want them to operate as commercial organisations. Should they do it only the traditional way on the margin between savings and lending - but then we have a go about miserly savings rates and extortionate lending and the discriminating against the poor who can't keep balances on their accounts. Should they do it through charging people who don't follow a set of rules ala Ryanair - no we tried that and didn't like it either. Should they do it by subsidising the costs of our banking system by selling of discretionary products, we're reasonably nervous about that working well. But bottom line is 2012 we're consuming more than we ever did from banks twenty years ago and no one seems to have a reasonable proposal about how those services should be paid for. The sharp selling is wrong, unmistakably wrong. There's no guarantee that if we paid for the transacting costs of our banking that would resolve misselling or achieve a miraculous culture change. It's not just banks who are doing this, though Martin rightly points out the consequences in banking are significant. The cross sell is regrettably everywhere, every week Mr Lewis warns about insurance companies auto renewing, charging extra for unnecessary legal insurances, the unjustifiable non optional extras added by airlines, discretionary service charges at restaurants and the list goes on. but the debate is one sided, we want everything from our banks except for any expectation that we should pay for it. The closest we have is FirstDirect who demand minimum deposits and balances and offer relatively little in the way of goodies except for notably good service - but are we all willing to pay for service.
  • my stepdad paid into a ppi on a loan he had and then my mum paid ppi through northern rock on one of those schemes where you release some of the equity on your home, they both died 2 years ago, my nephew phoned northern rock and lloyds tsb and they both said the same thing, you cant claim ppi posthumously. my nephew told them how he knew that the ppi,s had been paid but they both said that there was no proving it. i think its time people could claim back the money their loved ones had paid. how are these companies allowed to get away with it?
  • JuicyJesusJuicyJesus Forumite
    3.8K posts
    Tenth Anniversary 1,000 Posts Combo Breaker
    Although I dislike the fact his return key appears to be broken, I agree with everything brownibay just said.
    urs sinserly,
    ~~joosy jeezus~~
  • ConsumeristConsumerist Forumite
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    Part of the Furniture 1,000 Posts Name Dropper
    brownibay wrote: »
    . . . with highly trained and knowledgeable staff, . . .
    Oh! I must have missed something here.

    If only that were true. In recent years those "highly trained and knowledgeable staff" have concentrated mainly on selling us something we neither want nor need so that they qualify for a bonus or even just keep their jobs.

    Are you in banking, by any chance?

    In any event, welcome to the forum.
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
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