Giving evidence to the Parliamentary Commission on Banking Standards, Which? chief executive Peter Vicary-Smith called for a return to banking for customers, not bankers.
Which? chief executive Peter Vicary-Smith today gave evidence to the consumer panel of the Parliamentary Commission on Banking Standards, covering key consumer concerns with the banking sector from poor customer service to mis-selling, to the need for a radical change in the culture and practices of banking.
Talking about what needs to be done to ensure there are higher professional standards so that consumers are no longer short-changed by the banks and are protected from future mis-selling scandals and bail-outs, Peter Vicary-Smith said:
“We absolutely need better regulation – regulation focused not on ticking boxes but on better outcomes for consumers. Better professional ethics and standards is really important. It’s got to be enshrined in legislation. This cannot be done by the industry. The industry has lost all credibility.
“We let the industry try to sort a lot of this stuff out and there was a banking crisis. We’ve had PPI, we’ve had libor rigging since then. The industry has no credibility out there to sort itself out. This has to be independent. This has to come from outside otherwise you have the fox running the hen-house.”
On specific elements that need to change in the banking sector, Peter Vicary-Smith said:
“There are three things that I think are really important changes. An end to the sales focused culture and remuneration focused on selling rather than finding out what customers need. They should introduce professional standards that are independent and are rigorous. And let’s get back to a system where, through those, we hold individuals personally responsible, not just for the corporations they work for, because that is what we need to ensure accountability.”
Which? has launched a major new campaign ‘Big Change’ to make the banks work for customers, not bankers. The public can support the campaign by signing the ‘Big Change’ pledge.
‘Big Change’ is calling for:
- Bankers to put customers first, not sales.
- Bankers to meet professional standards and comply with a code of conduct.
- Bankers to be punished for mis-selling and bad practice.
Notes to editors:
Additional comments from the Which? chief executive from today’s session –
Asked whether free-in-credit banking leads to a distortion of the system:
“Retail banking has been profitable throughout the financial crisis, there is no crisis in retail banking profitability. The idea that a monthly charge would prevent or stop mis-selling is offensive and ludicrous.”
“The problem we have with mis-selling is about ethics and professional standards and the culture of remuneration in the banking sector.”
Asked why consumers buy products they don’t need:
“To open an HSBC packaged account consumers are expected to read 165 pages of information. No one is going to do that.”
Asked about switching accounts (level of dissatisfaction at an all time high yet level of switching at an all time low):
“A lot of consumers have said it’s not worth switching because all the banks are the same. There are banks that do well in our customer survey but those with the biggest market share are consistently bumping along the bottom.”
Asked about competition in the market:
“We would like to see a straight referral to the Competition Commission because the problems we have in the market are so ingrained that the banks with the dominant position are not there because of good value for money or offering great customer service, they are there because of the government bail-out, because of the implicit subsidy and because of a disregard for competition law.”
On people’s desire to have a more personal relationship with their bank:
“There doesn’t seem to be a reward for loyalty. The banks don’t seem to be interested in keeping their customer and deepening the relationship with each individual customer. And for that reason they look at the cost of something rather than the opportunity for contact.”