Comment: Bankers seem finally to be getting the message
LLOYDS has just indicated it is following Barclays in pulling the plug on incentivising retail staff based on the volumes of products they sell covering everything from current accounts to Payment Protection Insurance (PPI) and mortgages.
HSBC and Royal Bank of Scotland have already made similar, if more limited, moves, and are further reviewing links between staff pay and product sales.
In other words, a cavalier, profit-focused way of operating that was deemed perfectly acceptable by the banking industry for many years despite successive mis-selling scandals is on the verge of being collectively thrown out.
For this relief, much thanks. I estimate that over the past few years roughly one in every three times I have been to a bank counter I have been asked how I am today, if I’m am glad its nearly the weekend, and would I like to switch my mortgage/current account/savings etc to one of said bank’s offerings.
I could earn a better interest rate, apparently. Meanwhile, the queue seethes behind me as there are only two staff on the desk because it is lunchtime. Counter product-pushing has always seemed the vague banking equivalent of being accosted in the high street by relentlessly smiling “chuggers” with a sub-Saharan fixation.
On a more serious note, the penny has obviously dropped that linking incentives to volumes of products sold was always in danger of spawning serious mis-selling.
The pursuit of a drip-feed, volumes-driven bonus by not particularly well paid staff in the bank branches created exactly the wrong conditions for doing the best by the customer.
It is unlikely you will make a balanced assessment of whether a product is right for the customer if part of your mind is focused on whether the sale is right for your own earnings.
It is also difficult not to see the UK bill for PPI mis-selling – £10bn and rising – as being crucial in this fundamental change of mood towards such an obviously flawed selling model.
PPI looks to have trumped endowment mortgage and personal pension mis-selling in searing itself into the public’s consciousness of bank wrongdoing.
The new aspirational model seems to be suitability of products over sales volumes.
Pity the banking industry is only now understanding something which should have been seen as axiomatic.
Nothing random about links with Penguin
PENGUIN Random House looks a publishing bird that might fly. The timing looks right at any rate for a merger of Pearson’s Penguin book subsidiary and Bertelsmann’s Random House. The physical books industry has faced the growing competition of e-publishing, with the likes of Amazon, Apple and Google carving out a slice of the pie.
Less markedly than the media, arguably, but book publishing is having to cope with systemic change as a lot more people – admittedly from a low base – are migrating to reading online.
Penguin and Random are both well-run operations and powerful brands. The potential for costcutting and revenue synergies from a tie–up should be decent.
Readers and authors should get a greater breadth and depth of product and service globally, while shareholders will benefit from the consumer publishing industry’s consolidation without paying premiums for control.
Search for a job
Search for a car
Search for a house
Weather for Edinburgh
Monday 20 May 2013
Temperature: 8 C to 21 C
Wind Speed: 8 mph
Wind direction: North west
Temperature: 7 C to 17 C
Wind Speed: 10 mph
Wind direction: North west