GROWING customer unrest at HBOS resurfaced yesterday, with angry shareholders accusing the bank of sacrificing customer service for the sake of shareholder value.
At an unexpectedly heated annual meeting in Edinburgh, the board of the UK’s fourth-largest bank faced a concerted attack from more than 500 shareholders, who accused the board of failing to deal adequately with deteriorating customer-service levels, particularly within its retail operation.
After whipping through a summary of financial results, chairman Lord Stevenson and retail chief executive Andy Hornby, who was paid a salary of over 1 million last year to run the 22-million-customer empire, found themselves verbally accosted by unhappy investors.
For more than two hours they were grilled by shareholders, putting the top pairing firmly on the defensive, despite last year’s record profits and increased dividend growth.
One investor, John Carter from Fife, said he had recently bought a single share in HBOS so he could attend the AGM. He told Hornby that since the merger was announced in 2001, the service is now so unreliable that "I’m happy if I avoid mistakes on all my calls".
A number of others - despite being asked not to discuss individual cases - regaled the board with personal experiences, many trying to outdo each other in terms of farce.
According to John Dickson, a shareholder from London, the situation has deteriorated to such an extent that when he recently tried to withdraw money from his euro account, he was forced to explain to the girl at the other end of the phone that the "euro was a unit of foreign currency used in some European countries".
However, not all comments from the floor were critical and the board was given a brief respite when questioned about the normally contentious issue of offshoring, which chief executive James Crosby assured shareholders was not part of the bank’s plans.
After a trading update showed HBOS was trading "in line with expectations" for the first three months of the year, a number of investors congratulated the company on its strong financial performance last year. But perhaps inevitably, the proceedings swung back to customer service.
One investor said that, while he was happy as a shareholder, "unfortunately I’m not so happy as a customer". While another told the board: "You keep talking about share value. Well I believe the order of priority should be customer, staff and then shareholder. If you don’t have customers you don’t have a bank."
Since 2001, about 60 Bank of Scotland and Halifax branches have been amalgamated, but customers have become increasingly agitated about weak service levels, a reduction in qualified staff and the transfer of accounts. At the end of last year The Scotsman was inundated with letters of complaint.
Yesterday, a contrite Lord Stevenson admitted customer service left room for improvement, but said he was confident it was on the mend.