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Banks still guilty of widespread mis-selling, survey finds

by Daniel Grote on Dec 07, 2012 at 08:33

Banks still guilty of widespread mis-selling, survey finds

High street banks are still using high-pressure sales tactics among their staff despite the mis-selling scandals that have blighted the sector, according to an investigation by consumer group Which?

Which? conducted a survey of more than 500 staff at HSBC, Royal Bank of Scotland, Lloyds Banking Group, Barclays and Santander.

It found that two-thirds of bank sales staff with targets felt they were under more pressure than ever to meet them. Almost half said they knew colleagues who had mis-sold products to meet targets and four in 10 said targets drove staff to sell products even when they are not appropriate.

The survey also found that four in 10 with targets were subject to ‘power hours’ where they were expected to make a certain number of sales in a specified period of time. It said the most common reason for staff being told to sell more was to hit targets and increase profits, with the customer need ranking low on the list.

A further survey among consumers found that four in 10 were offered a new product they did not deem suitable when they contacted their bank, while a quarter felt pressurised to take it.

Which? chief executive Peter Vicary-Smith said the survey showed the need for change across the banking sector. ‘We’re calling on the banks to be much more transparent about their sales targets and incentives,’ he said. ‘We also want to see bankers meet professional standards and comply with a fully independent code of conduct.’

42 comments so far. Why not have your say?

Phil Sipocz via mobile

Dec 07, 2012 at 08:53

No!!!!!!!!!! Really?

Here's another story for you....a survey finds out what we already knew. It also found that 65% of statistics are made up.

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Anitaki

Dec 07, 2012 at 09:02

Yes Phil, but this one probably isn't made up.

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Richard via mobile

Dec 07, 2012 at 09:03

Of course they're still misselling; it's an integral part of bank culture. Every time they get caught, they just get the cheque book out. Just like a speeding fine, except they don't pick up a ban for persistent offending....

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richard dear

Dec 07, 2012 at 09:05

And bears frequent woods too....

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fomer bank 'adviser'

Dec 07, 2012 at 09:10

The FSA need to ban the heads of business and business strategy managers. Only then will the culture change.

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victor sacks via mobile

Dec 07, 2012 at 09:13

.....no excrement sherlock.........

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Belmarsh Solitary

Dec 07, 2012 at 09:16

Surely the RDR will sort all this out

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Jonathan Kirby

Dec 07, 2012 at 09:20

Yet RDR will make this worse as the sales will no longer be advised and hence no comeback.

What were the deaFSA thinking of?

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Hugo Craggs

Dec 07, 2012 at 09:24

i think we can safely say there are other high street names there too. i know an ex adviser from a brand not mentioned, who left due to these practices. he was miserable the clients poorly treated, he is happy now.

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Richard via mobile

Dec 07, 2012 at 09:26

It's pretty obvious that the FSA were in cahoots with the banks when formulating RDR. It won't get any better once RDR is here, that's for sure.

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Sammie

Dec 07, 2012 at 09:40

My problem with this debacle is that senior management are making these decisions not the underlimg who do as there told Those responsoble should be rounded fined and banned from the insurance industry, oops banking indistry.

Same old ,same old

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Chris F via mobile

Dec 07, 2012 at 09:40

As has been pointed out - until there are real consequences for the greedy slime balls who force staff to sell with the threat of losing their jobs, then this will continue.

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John Smyth 3

Dec 07, 2012 at 09:40

@ former bank adviser

Some directors also. Banning is not enough for them. The sales systems they manage are corrupt and fraudulent. What they do is steal from the gullible. They should be prosecuted also.

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Man of Kent

Dec 07, 2012 at 09:41

A bitg unfair to label these people "bankers" - surely they're just cogs in the machine? The only real choice they have is do it or leave.

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former_lloyds/hbos_saleman via mobile

Dec 07, 2012 at 09:42

I was a former lloyds/hbos salesman as that is what we were managed by our area managers to do sell not advise. Targets, Pips, late night call sessions and workshops were all used to bully and humilate us into selling products which either the customer didnt need or had any idea they were going to be sold. We regularly had Power hours to sell certain products and also had head to head competitions between areas via a area ping (email) to brag about how the sale was made to unsuspecting customers. I also watched the same managers put advisers through disciplinary hearing for compliants by customers who did not remember that the level term sold was for a term not a whole of life. This all took place 6 months ago and is still going on.. The bank think this whole FSA and TCF is a joke, they tick boxes, make examples of people who they have bullied into making these sales... Banks should not be selling investments/protection

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Dogman

Dec 07, 2012 at 09:43

I had a brief encounter as a bancassurer a few years ago, and this high target hard selling culture has existed for over a decade.

Nearly the entire salesforce are on performance management plans, and this stream of middle managers are tasked with breathing down the advisers' necks all day every day.

I have never met such a group of miserable, demotivated, and stressed out people as I did when I worked in the banking sector. And the sad thing is, the products aren't even that good!

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Pete Kelsey

Dec 07, 2012 at 09:56

Apart from being an under-regulated bunch of greed-driven product-jockeys who since regulation began mis-sell Endowments, Pensions, Precipice Bonds, AIG, PPI and anything else that helps hit this year's target (oh and mostly also going bust to destroy shareholder value), what is wrong with the current banking model?

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James Clancy

Dec 07, 2012 at 10:01

It will al stop at Barclays (if the news reports are correct) when Hector will be in charge of compliance !!!!!

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Anitaki

Dec 07, 2012 at 10:20

@ Dogman > > WELL over 25 years actually

And they've always got away with it whilst regulators concentrated on 'small fry'

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Julian Stevens

Dec 07, 2012 at 10:23

For how long have such practices been going on? Decades.

For how long has the FSA been aware of them? Since it came into being.

For how long have the considerably more ethical sectors of the industry been calling for the FSA to take action? Decades.

Why hasn't the FSA acted? Answers on a postcard please.

Is the remedy straightforward? Of course it is. Bank salespeople should be required to follow a strictly enforced code of practice:-

1. By all means allow the banks to make their customers aware of their financial services arms, but BAN cross referrals from counter staff and BAN cold calling.

2. Enforce much more rigidly disclosure of the limitations of tied or multi-tied advice by comparison with WoM, not least the unavailability of any advice on existing provisions with any providers other than those to whom the bank is tied.

3. BAN the use of the term adviser for tied and multi-tied sales people ~ they're sales consultants and should not be allowed to describe themselves as anything else.

4. Insist that all recommendations, including full and unambiguous disclosure of costs and charges, must be presented in writing to clients at least a week, maybe more, in advance of any second meeting (instead of a week or ten days post-sale, as a box-ticking exercise just to make the sale compliant)..

5. Insist that written recommendations include a clear statement that the client is under no obligation to attend any further meetings unless they're entirely happy with those recommendations.

How, with its massive resources and the persistent and widely reported prevalence of pressure selling practices on the part of the banks, has the FSA been unable (or unwilling) to devise and impose such a code of practice?

How, when EVERYBODY knows that IFA's are the most trusted and, by a huge margin, the least complained about distribution channel, on what basis can the FSA POSSIBLY justify giving greater priority to matters such as testing the viability of IFA business models?

(Lack of) action speaks considerably louder than mealy-mouthed expressions of concern about undesirable incentivisation schemes and the high pressure imposition of steep sales targets. The FSA/FCA need actually to DO SOMETHING. The fact that they're not tells its own story.

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madmitch

Dec 07, 2012 at 10:27

Got to admit some of the figures quoted by Which have really stunned me!

I really cany beleive that only half know of someone who has mis sold a product

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Derek Spaniel

Dec 07, 2012 at 10:28

They also expect when 'caught out' to transfer the costs of misselling to Insurers, hardly an error or omission here, as what they do is deliberate, sales target meeting revenue grab that is condoned and pushed by Managers and their boards,

Crooks

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Captain Hindsight

Dec 07, 2012 at 10:32

Having had the misfortune to have worked in this malodorous, immoral sector of the financial services arena; my experience was that the 'Disciplinary hearing' (with pre-determined results, ususally called over a trivial matter, trumped up and blown out of all sensible proportion) was the hammer with which the 'salesforce' were beaten to sell at all costs.

Woe betide any 'salesman' who did not sell the prescribed product of the day/week or month (regardless of suitability). 7am meetings in Timbuctu, 11pm phone grillings and the alr3eady mentioned 'disciplinary hammer' were all employed by the thig-like management.

Glengarry Glenross, was a Disney movie by comparison!

So glad to be out of that environment. I pray daily that my former employer and every obnoxious 'manager' I encountered during my tenure of slavery there are exposed for their past transgressions - a forlorn hope I feel though, as only a miniscule proportion of the sins of these perverted monoliths ever becomes public (IMO).

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Anitaki

Dec 07, 2012 at 10:35

Job ads had the words "On target earnings". < < There's the clue

What the ads didn't say was "Woe betide anyone failing to make target"

So, they sold endowment mortgages, instead of ISA mortgages with term. It was impossible to make target and keep your job if you gave "best advice"

Who remembers the Halifax IFA division, HIFAL?? I was there for a short time and would happily co-operative with any FSA/FCA investigation.

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Jonathan Kirby

Dec 07, 2012 at 10:44

@ Julian Stevens

Sound sense but I can't see it happening.

There aren't any advice arms as such any more but advice is given by a 'nod and a wink' yet there will be no comeback as the customer was given the information and chose the product!

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Smithling

Dec 07, 2012 at 10:53

These statistics actually sound quite understated from my past experience. Sadly.

I'd happily lift the lid on bancassurance, it would be better for every single person in the coutry.... except the bank's shareholders... which is every person in the country.

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Green Eyed Monster

Dec 07, 2012 at 11:04

Come on guys!

What FSA official is going to challenge the banks ?

We won't see an improvement until the govenrnment changes the FSMA 2000 to make the FSA answerable to parliament - not to the banks. .

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Sovereign

Dec 07, 2012 at 11:14

The Bank advice channels are corrupt to the core.

Even as we speak a well known life company who works in partnership with a few well known banks, providing their bancassurance service has begun an agressive performance management programme with a view to managing the bottom 25% of their 'Salesforce' out of the business. This is clearly to reduce the enevitable redundancy bill when they have to close the doors on a business proposition that is economically and ethically flawed.

If people are threatened with their job, which will result in not being able to make mortgage payments or support their family unless they sell more investments, it is simple logic that they will be forced to downplay risks and upsell benefits in order to achieve this. Whichever way you look at it, the focus is never going to be on the best outcome for the customer!!!

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Smithling

Dec 07, 2012 at 11:16

Monster

I would argue that you won't see an improvement until there is a complete ban on banks even having the option of providing investment products.

When you give a bunch of teenage bank staff a target of "get 3 investment ISA's sold by lunch and you get an ipod" there will always ALWAYS be misselling.

Doesn't matter how you dress it up or what rules you put in the place, the banks will always sling their overpriced crappy products at anybody that walks through the door whether its appropriate or not.

The only way to stop it is to literally remove the product from their range. Since that will never happen I have absolutely no faith that the banks will ever actually stop flogging their filth.

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Barman

Dec 07, 2012 at 11:18

FSMA 2000 does make the FSA accountable to the treasury.

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Phil Castle

Dec 07, 2012 at 11:21

I agree with Jonathan Kirby, RDR will make this worse as the bank sales will no longer be advised and hence no comeback.

What were the deaFSA thinking of?

Nationwide announce today they will not be giving pension advice so clients should go to an IFA. That's nice, so does the client then stay with us or go back to the nationwide later when they start giving pension advice again?

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Sovereign

Dec 07, 2012 at 11:26

The Bank advice channels are corrupt to the core.

Even as we speak a well known life company who works in partnership with a few well known banks, providing their bancassurance service has begun an agressive performance management programme with a view to managing the bottom 25% of their 'Salesforce' out of the business. This is clearly to reduce the enevitable redundancy bill when they have to close the doors on a business proposition that is economically and ethically flawed.

If people are threatened with their job, which will result in not being able to make mortgage payments or support their family unless they sell more investments, it is simple logic that they will be forced to downplay risks and upsell benefits in order to achieve this. Whichever way you look at it, the focus is never going to be on the best outcome for the customer!!!

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Green Eyed Monster

Dec 07, 2012 at 12:12

@Smithling

I agree totally, but ...

given that the FSA has a secret agenda to clear the market of IFAs to faciliate their mates (possibly future colleagues?) in the banks, what chance is there of the banks being banned from flogging financial products?

The best we can hope for is the banks are made to clean up their act.

How often do the FSA reps visit the banks to check the files for TCF?

How often to they identify the culprit(s)?

What happens to these people?

Do the banks then fire them, or tell them to go back to flogging?

Is there a black mark placed against the mis-seller, the manager, the director?

Sorry, phone is ringing, must end this wishful thinking!

.

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Richard Hardy

Dec 07, 2012 at 12:21

And RDR will not stop it yet everyone else in the industry who has abided by the rules suffers or goes out of business.

You can't make it up!

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John D

Dec 07, 2012 at 12:29

further news........."turkeys still not keen on Christmas".................

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Another Ex Bank Adviser

Dec 07, 2012 at 13:41

I am another ex high street bank adviser. I managed not quite two years before I had to leave. I agree totally with the comments made by the other ex employees of the banks. The 'pings', the competition, the ridicule by your manager/senior/high performing colleagues if you didn't sell as much as them. The lower or higher 'reward' towards your target dependent on what product was sold (i.e. the low risk products were worth less towards your target than the higher risk products per £ sold).

I could not sell to the demographic that is a bank customer something that was absolutely wrong for them, that they couldn't understand. It seemed wrong and I left because of that; not so much the bully boy tactics.

Speaking to my ex colleagues, one has told me that he has been threatened with a £7K pay cut and reduced benefits if he misses another quarter's target in the next twelve months. With three children and a mortgage, he can't risk that drop.

Most (and I will say most and not all) bank advisers go into the job thinking they will make a difference, that they will advise. Then they get stuck. The lucky manage to get out and I thank my lucky stars that I did.

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Ian Lees

Dec 09, 2012 at 10:05

given the continuation of widespread misselling - or as it is called in my opinion " Fraud ", it is good to see Barclays - the bank who fiddle Libor - offer teh Barclays Bung and Bonus Scheme to " Hector Sants ". Was he not a regulator in a previous life ? or was he heading it up before passing the buck ? draw a line under the fraud against consumers - another government cover up. So what do you want for christmas littel boy ? RDR please Santa - replied "dinky " David Cameron PM ( backwards MP ? ) . So with the contaction of Adivce - to restircted - and hten obsolete - Dave's " big " society is getting deciedly - decreasingly smaller ?

Even Hitler did not ivoke " Auto Enrolment " on the common man ! ( or woman - but there are less women in work - reason lower wages e.g banks and mutual building societies such as Nationslide !?!

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