The final part of the three part series called “Bankers”, which aired on BBC 2 on 22 May 2013, painted a damning picture of the last generation of bankers. A long list of leaders from the current generation lined up to candidly admit that the previous custodians of the banking industry had abused the trust of their customers and sacrificed long-term relationships for quick profits. The list of mis-sold financial products is long and ranges from products which are fairly simple in design, such as payment protection insurance (PPI), to incredibly complex products, including interest rate swaps. It seems acutely obvious from the BBC 2 series that the previous attitude of banks was to give greater weight to the achievement of internal sales targets rather than that given to understanding and satisfying customer needs.
Will our banks ever change?
The senior bankers interviewed as part of the BBC 2 programme appeared to genuinely believe that the way forward was a more customer oriented approach that puts the needs of customers before short term profits. Great stuff from the top then – but is the culture actually changing at grass roots? Frankly, it appears to me that the jury is still out on that one. Let me explain…….
Banks request for an ‘artificial time bar’ on claims
Early this year, via their trade body the British Bankers Association (BBA), the banks made a request to the then regulator (the Financial Services Authority) to introduce an artificial time bar in respect of PPI claims. Not surprisingly there was uproar against this suggestion from consumer groups and it appears the suggestion has been put into ‘room 101’. However, the wider question from my point of view is why would a business and someone leading that business who truly wants to put customers’ interests’ first, attempt to take away a customer’s statutory rights? There is already a time bar on claims – the details of which are set out in ‘Limitation Acts’. Generally this means that customers can bring a claim within 6 years of the damage claimed about or within 3 years of the ‘date of knowledge’ where the damage was not known within the initial 6 year period; with a long stop date of 15 years after the damage. The important issue is, in my view, ‘are customers who have been subject to mis-sold products going to get redress in an efficient and timely manner’.
PPI’s missing Billions!
The most recent figures issued by the Financial Conduct Authority (FCA) show that the amount paid out for mis-sold PPI since January 2011 is £9.6bn. These figures come from 24 firms that make up 96% of complaints about the sale of PPI last year, but to my mind these figures simply show how much more needs to be done. There are estimates that the final redress figure will be close to £25bn (which is almost double the £13bn that banks have put aside). The Financial Ombudsman Service says, in respect of PPI, “It is expected to take years, not months, to sort out all the issues involved.” So it seems to me that if positive messages given by the senior bankers in the BBC 2 programme are genuine, the focus of their colleagues should not be an artificial time bar, but a positive and proactive approach to solving the complaints without any hassle and pay back the missing billions!