– World news selected by Gazette editors for Phuket’s international community
PHUKET:Bad behavior that has cost British banks 38.5 billion pounds ($60 billion) in fines and compensation over the past 15 years will take a generation to fix, an independent think tank said on Tuesday.
Britain’s banks have been hit by scandals ranging from the attempted manipulation of foreign exchange and benchmark interest rates to the mis-selling of loan insurance and complex interest-rate hedging products.
A report into the culture of British retail banking by think tank New City Agenda and Cass Business School said that an aggressive sales culture took hold over two decades, with some branch staff receiving cash bonuses, iPods or even tickets to the Wimbledon tennis tournament for hitting sales targets.
“A toxic culture which was decades in the making will take a generation to turn around,” said Conservative lawmaker David Davis, chairman of New City Agenda. “At this critical juncture, Britain’s biggest banks cannot afford to let the better treatment of customers become a second-order priority.”
The report said the mis-selling of payment protection insurance (PPI) alone cost banks at least 27bn pounds in Britain’s costliest consumer scandal. The high-margin products were meant to cover repayments if customers fell ill or were out of work but were often sold to people who did not need them or would be ineligible to claim.
The biggest sum set aside by a bank for PPI compensation is the 11.3bn pounds at Lloyds Banking Group, followed by Barclays (5bn pounds), RBS (3.3bn pounds) and HSBC (2.5bn pounds).
New City Agenda noted that banks had received 20.8 million complaints since the 2007/09 financial crisis, during which time there was a fivefold increase in cases going to the financial ombudsman, which settles disputes when banks and customers fail to reach agreement.
It recommended that the new Banking Standards Review Council should talk to branch staff to check they are not under pressure to sell and should report annually to parliament’s Treasury Committee, which oversees the work of the finance ministry.
“The need for culture change has been recognized, but it has to be transmitted all the way from the top to the bottom of these huge organizations,” said John McFall, a director of New City Agenda and former Treasury Committee chairman.
— Phuket Gazette Editors