Royal Bank of Scotland is scrapping bonuses for 20,000 customer-facing employees.
The state-backed lender said the move, which takes effect from 1 January, will mean workers based in branches and call centres at its personal and business banking operations would be “fully focused on helping customers with their financial needs”.
In return for missing out on their annual bonuses, about 20,000 frontline staff at RBS and its NatWest brand will instead receive an average increase in their basic pay of about 5 per cent.
Les Matheson, chief executive of personal and business banking for RBS and NatWest, said: “We want to become a stronger, simpler and fairer bank and be the number one for customer service, trust and advocacy. We’ve already taken a number of steps toward this, such as challenging the industry practice of teaser rates.”
He added: “Since 2014, the personal and business banking business has been relentlessly focusing on becoming the number one bank for customer service, trust and advocacy by 2020. We’ve made good progress on this by challenging the industry on things like scrapping teaser rates that aren’t in our customers’ best interests, offering our new and existing customers the same price whether they’re in a branch or on the phone, and simplifying our product range so it’s easier for our customers to choose a product that suits their needs best. In doing all this, we’ve learned an important lesson – we need to keep doing the right thing for our customers.
“Our customers come to us because they know we can help them with their finances – whether that’s taking out a mortgage, protecting their financial future or managing their business. But what they also need to know is that every conversation they have with us is based on them and their financial needs.
“Removing incentives is good for our customers, but it’s also good for our employees. We’re showing confidence in our people by removing this distraction and rewarding them up front so their sole focus is on doing a great job for our customers every day. And through having engaged employees, we are confident we will deliver the best level of service to our customers.”
RBS said last month that its underlying profits more than halved to £842 million in the third trading quarter of 2015.
The group also warned investors that costs related to past misconduct may be much higher than previously expected, having already set aside £4.5 billion to cover regulatory and legal actions.
Matheson said: “We can’t change the past but we can learn from it. We want to be better than any other bank and we feel that having our employees completely focused on the financial needs of our customers is another way to win back their trust.”
Earlier this week RBS announced the appointment of Malcolm Buchanan as the new chair of its Scotland board. Buchanan, who is currently the managing director of corporate and commercial banking in Scotland, a position he will retain, takes over from Ken Barclay, who is leaving the Edinburgh-based lender after almost 40 years.