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Sweep the past under the carpet with a ‘time bar’ – £252b conduct costs

Recent research by CCP Research Foundation (one of the few organisations in the World who collate global published banking data) have recently issued details on global banking fines. At any level the sums are eye watering. According to the data the world’s 20 biggest banks have paid out £252bn in the last 5 years in fines, customer compensation and legal bills. The report predicts provisions against future actions at £66bn. This shows that banks’ ability to treat customers fairly is a global problem rather than a UK unique one. The UK picture contributes significantly to the global situation with a single-year total for all banks in the survey in 2015 of £28bn, down from a peak of £63.6bn in 2014. The report suggests that some of the fines have been “close to being life-threatening and, in at least one case, carried significant geo-political implications.”

Exposing the mis-selling of bank products – “trust crisis”

These costs are given a less edgy title of ‘conduct costs’ although for every pound, dollar or yen paid out a consumer has ultimately lost out. The report uses the term “trust crisis” and we know about that in the UK as consumers have become immune to headline after headline exposing the mis-selling of one banking product after another.

Wrongly rejected complaints upheld by the FOS

Banks have to move on from the past. Restoring public trust should now be high on all bank board meeting agendas, but this should not just be seen as an objective for future bank/consumer relationships. Any ‘restoring public trust’ project also has to focus on how existing customers who complain are dealt with by their bank. Banks track records in this regard is not good, as evidenced by the number of complaints that are wrongly rejected by banks only to be up held in favour of the consumer by the Financial Ombudsman Service.

Sweep the past under the carpet with a ‘time bar’

While all this is going on the FCA still has in its inbox a proposal from the banking world to sweep the past under the carpet with a ‘time bar’ on claims. As the PFCA has always stated a ‘time bar’ may be appropriate one day, but not yet. Such a let off should only be considered when there is clear evidence that banks have turned the corner and ‘treating customers fairly’ has been adopted as the default approach in all banking activities. While the most recent FOS six-monthly data to the period ending 30 June 2016 is awaited the jury is still out.

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