Along with the vaguely Kafkaesque “thank you for waiting” when the customer has little real option, proactive bank product selling has become one of the low-key industry-wide irritants of daily life.
But, as the £28 million regulatory fine on Lloyds shows again, practices in the sector in the past two decades moved way beyond exasperation to the more serious flogging of inappropriate products by advisers.
Embarrassingly for Lloyds boss Antonio Horta-Osorio, the mis-selling of £2 billion of products to some 700,000 people who did not need or want them happened partly on his watch, running from 2010 to March 2012.
Horta-Osorio is far from alone in the industry in championing the consumer, but he has been high-profile in his advocacy of putting the customer at the heart of Lloyds’s ethos.
It also takes the sheen off a positive period for the bank that has seen the taxpayer’s holding reduced and the plausible prospect of renewed dividends.
Lloyds and its Bank of Scotland and Halifax subsidiaries did not learn its earlier regulatory lesson.
The Financial Conduct Authority (FCA) increased its fine 10 per cent because the regulator’s predecessor, the Financial Services Authority, had already warned the bank about inappropriate incentive schemes over a number of years.
The FCA’s report is damning, saying that sales staff at the bank were pressurised to hit targets on products such as critical illness and income protection to get a bonus or avoid being demoted.
In one instance a Lloyds adviser sold protection products to himself, his wife and a colleague to prevent himself being demoted. This surely breaks new ground in banking innovation.
McEwan faces being overtaken by events
NEW Royal Bank of Scotland chief executive Ross McEwan could be forgiven for mimicking former the Tory prime minister Harold Macmillan, who, when asked what he feared most, replied “Events, dear boy, events”.
It has been one event after another since he took over the RBS helm from Stephen Hester this autumn, including critical reports on the group’s small business lending and customer-alienating IT breakdowns.
Now his finance director has walked out ten weeks into the job. So Nathan Bostock will not help McEwan fulfil his pledge to put the customer at the heart of RBS’s offering (déjà-vu).
Instead, Bostock is returning to his former employer, Santander UK, as chief risk officer and deputy chief executive under Ana Botin.
It could be that Bostock was also unhappy at missing out on the top job at RBS to McEwan when George Osborne offered to fetch Hester’s hat and coat and order him a taxi from the bank’s Gogarburn HQ after the latter’s five-year financial turnaround of the bank.
McEwan continues to be tested by his baptism of fire. Let’s hope nothing untoward happens before the weekend.