Overhauling the broken culture of high street banking will take a generation to achieve, according to a report that found UK banks have received 20m customer complaints since the financial crisis.
The report, by the thinktank New City Agenda, calculated that in the last 15 years the retail operations of banks had incurred £38.5m in fines and redress for mistreatment of customers.
Andre Spicer, a professor at Cass Business School and the report’s lead author, said: “Most people we spoke to told us that real change will take at least five years.
“There was some uncertainty as to how these changes were being translated into good practice at the customer coalface. Many culture change initiatives are fragile, and their success is not ensured. It’s clear to us that much work still needs to be done.”
The report concluded that it will take a generation to end a sales culture exposed by the 2008 crisis. It said UK banks did not address cultural change until the eruption of the Libor scandal in 2012, having failed to act after the emergence of mis-selling debacles such as the payment protection insurance scandal.
“A toxic culture, decades in the making, will take a generation to clean up,” said the founders of New City Agenda, who are Labour peer Lord McFall, Conservative MP David Davis, and Liberal Democrat peer Lord Sharkey.
They added: “Some frontline staff told us they still feel under significant pressure to sell. Complaints continue to rise and trust remains extremely low. Most of the people we talked to believed that real change, and as a consequence the better treatment of customers, will take some time to achieve.”
It took the Libor scandal – rather than mis-selling debacles such as payment protection insurance which has cost £27bn – to force banks to embark on initiatives to change the culture, the report said.
The report focuses on retail banking and highlights one employee saying how she turned up for work early for a “huddle” and then had a team “cuddle” at the end of the day. Attendance at these team meetings was unpaid. Others had cabbages placed on their desks if they had underperformed. Staff at Barclays said the work environment was getting better but staff at other banks felt they were under greater pressure.
The report said employees were wary of change because of the job cuts and changes in top management which had taken place since the crisis.
“The old culture is ingrained. A number of banks told us that one of the largest challenges they faced was that the existing culture was highly ingrained in their people,” the report said.
Among the ideas put forward is for chief executives and chairmen to be responsible for culture after one of the people interviewed for the report highlighted the “murder on the Orient Express defence” deployed at banks, where everyone was to blame.
The report also calls on investors to provide support for the cultural changes under way at banks. “Over-reacting to short-term profits will be unhelpful,” the report said.
It added that the Banking Standards Review Council – established by banks to set out new guidelines for the industry – should make an annual report to the Treasury select committee and conduct an annual survey of frontline staff to establish whether aggressive sales cultures still exist.
The archbishop of Canterbury, Justin Welby, who sits on the board of New City Agenda, said the fines imposed on banks this month for forex rigging showed “the length of the journey of culture change that still needs to be travelled”.
Welby sat on the parliamentary commission on banking standards, set up in the wake of the 2012 Libor rigging fines. McFall, who also sat on the commission, said banks needed to ensure “they are straining every sinew to put customers back at the heart of retail banking.
“In the past, the interests of customers were often totally disregarded. Some were brazenly exploited.”
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