Banks 'have learnt nothing' as sales targets continue

Published on Wednesday 27 January 2010 21:00

BRITAIN'S banks continue to set reckless, aggressive sales targets for products such as loans and credit cards and have learnt nothing from the banking crisis, unions claimed yesterday.

Unite and the STUC told the Scottish parliamentary banking inquiry that the target-driven culture that fuelled the subprime crisis in 2007 was continuing unabated. Retail banking staff in particular are still forced to meet "unachievable" targets or face the sack, the unions claimed.

Rob MacGregor, national officer for finance at Unite, said the banks were in danger of relapsing into a behavioural pattern of chasing ever more sales without any concern for the wider economic climate and the UK's unprecedented levels of personal debt.

He told Holyrood's economy committee: "While a lot has happened (since 2007], very little has materially changed."

MacGregor said that in the run-up to the banking crisis institutions chased unrealistic targets, which were ultimately the "ruination" of the industry. But despite the calamitous events of the past three years, corporate behaviour remained the same, he said.

Unite claims that some of its members in retail banking have been reduced to taking out unwanted loans or credit cards themselves in order to achieve targets and secure their bonuses. But unlike rewards for investment bankers, bonuses in the retail sector are low, the union says. MSPs heard yesterday that most retail staff are on salaries of between 14,000 and 15,000 and need their bonuses "to make ends meet".

MacGregor said bank staff on the ground had borne the brunt of public anger about a crisis that was principally caused by investment bankers and senior executives in "ivory towers".

He said: "People feel they (clerks and cashiers] are on fantastic salaries and bonuses that buy second homes with Ferraris in the garage, which is nonsense."

Unite estimates that 5,000 jobs have so far been lost in the financial sector north of the Border. As revealed to The Scotsman this week, staff in Scotland are currently mired in a morale crisis, MacGregor said.

He told MSPs: "It's hard to overstate the impact the financial crisis has had, not just on employment within the sector in Scotland and elsewhere but on the morale of the remaining workforce. It has had a frankly devastating impact."

A spokeswoman for the British Bankers' Association denied the banks had not learnt from the past three years. She said: "They have done a lot to restructure and ensure that mistakes were recognised and could not happen again. Banks make every effort to lend only to those who can afford it."

Bryan Johnston of Brewin Dolphin told the inquiry that everyone, including the public and the government, should share in the responsibility of the banking crisis as "we all" benefited from the boom that preceded the collapse. He said: "We are all culpable. The government was gleaning vast amounts of tax from bankers and banks without asking questions."