Improving the professional and ethical conduct of bankers – a consumer perspective
Our non-practitioner Board member and Chief Executive of Citizens Advice Gillian Guy CBE spoke passionately at the FT Banking Standards conference on the impact of the banking industry’s conduct on the everyday finances and lives of real people:
I think it’s important that when we think about the conduct and behaviour of the banking sector, we remind ourselves of just what a precarious situation many people are currently in. That is why I welcome so much of the work that has been done recently on vulnerability, both proactively by the industry and in response to the FCA’s agenda.
The work some banks have done to improve standards in debt collection and recovery puts you well ahead of some other creditors, notably central government departments and agencies. In fact, there are probably many lessons banks should share with them. It is also great news that high street banks are opening up and offering basic bank accounts to those who are regularly refused current accounts. That said – it has taken well over a decade to get many to offer them. And launching them is only the beginning.
These improvements are only a job half done.
I say that for a couple of reasons. First, I know and the banks know that we can talk a good game. Strategies are developed and published. We can talk about ethical standards and putting the customer first. We can sit on boards and engage in debates. But it will mean nothing if we don’t deliver something of material difference for consumers.
Talking about better standards at events like the FT Banking Standards conference will not by itself reduce the number of people coming to Citizens Advice who have been let down by poor service, misselling or bad practice in the financial services sector. So let’s ensure we follow through. Strategies need to be written and debates need to be had – but the real difference customers will experience is if we ensure we deliver on the front line. Whether that is a branch, a call centre or online.
Second, while the banking industry appear to be optimistic about the end of the financial crisis and economic recovery, that is nothing like reality for many people who are still living with the consequences. At events such as the FT Banking Standards conference we talk about the social licence and the social good banks do. Working for the interests of society, creating investment and prosperity. That may be true at a macro-level, but it doesn’t cut it with those who were impacted by the crash and the recession. Those who lost jobs, saw wages reduce, made sacrifices, lost homes and face welfare reforms.
A couple of months ago I challenged a similar audience to that at the conference to come and visit a Citizens Advice office and witness first hand some of these issues we deal with and the impact they can have on people’s lives. The experience of some of these people include high and unplanned overdraft charges, mainstream credit rejection, high-cost credit alternatives with crippling fees and charges and suspect debt collection practices.
The fact is that financial products and services are a key utility in modern Britain. We all rely on them, as much as we rely on the lights to come on and the water in our taps. So, when talking about behaviours, conduct and ethics – this isn’t something that can be put right with a vulnerability strategy or the launch of a new inclusive product, important advances though they are. The industry will fail to win back the support of the public and customers if it only adds these things around the edges and then, largely, when told to do so – as was ultimately the case with basic bank accounts. We await the CMA’s proclamation on overdrafts.
Trust seems to be the holy grail, but it is not an end in itself – it is a happy byproduct of a series of judgements based on every single interaction with the public whether direct or attributed. So let’s be clear – this is a whole new ball game and requires a wholesale change of mind and crucially, a change of heart – if this is just about compliance, the public will see straight through it.
In the meantime, there are opportunities to do something significant – here and now – beyond compliance:
Don’t just keep basic bank accounts in the locker but promote them and make them truly accessible. We will helpfully be monitoring this and letting banks know how you are doing!
Banks should work with us and other such organisations to ensure that consumers improve their money skills. Let’s do it in partnership, so that customers know that banks are investing in them and feel valued.
It seems highly likely that we will have some sort of deadline for PPI claims. Many banks have made further provision. We have heard all about the difficulties with identifying and quantifying claims.
Claims management companies are rubbing their hands at the thought of this closing down sale – claims management companies that typically charge 30% or more in commission. Banks have the wherewithal to turn this around – by demonstrating that professional and ethical standards in the industry are improving, by taking social responsibility seriously and, most importantly, being trustworthy.
Encourage and help people to claim, promote and signpost them to free support and why not reinvest some of the benefit that accrues from this close-down in helping to improve and build financial capability?
And finally – sign up for that visit to a local CA and see first hand the impact you have on the lives of real people.