Lloyds to scrap sales incentives as banks' PPI bills hit £10bn

Is that the sound of a horse running round outside the stable I can hear?

I was warning the Bank about this 10 years ago that they were on a slippery slope, I was 'run out of town' for being "Negative" and "not being a team player".

If we want to get some money back go and ask for all the money paid in bonuses to all those "Fantastic" sales managers who patted themselves on the back about how great they were for continually stitching up clients with things they didn't need or couldn't afford.

For me this situation has great parallels with the Cycling and Lance Armstrong. There was an Omerta in cycling about doping and there was an Omerta about the sharp sales practices in Banks.

Unfortunately not enough people took a stance against it or if they did they were swept away by the huge numbers of people driven by pure greed.

Let's hope this is a step in the right direction and I have to say well done and send support for those that are now taking these decisions to try to rebuild the Banking industry in this country.

FSA actions 10 years too late again.

I too was castigated as "not a team player" many years ago by the barrow boys who had started to run financial services at the Halifax. I refused to allow my sales team to stitch up clients and a blind eye was turned to those who did as they were 150% of target, which was all that mattered.

If it actually stops mis-selling then surely this has to be good news.

Very much a case of watch this space though as the banks will still have to find a way of making profit.

Jonathan Kirby is correct. The answer must be to end "free" banking, which in reality means that their poorer customers end up paying high overdraft and penalty fees, whilst the customer base as a whole is at risk of mis-selling financial products.

A current account is a valuable service. We should all pay a monthly fee for that service (maybe £10 per month?); the banks can earn money for their work and we can avoid the disasters that have occurred since "free banking" was introduced by HSBC (then Midland Bank) in the 1980's.

Christopher

The end of "Free Banking" will not end the problem as more people will then switch to cheaper on-line banks who use overseas based internet staff.

Unemployment will then increase, and you will create a deeper recession as High Streets atrophy. There is no simple solution to this problem. Banks and "sales forces" made £Billions as Thomas & Paul have already stated. Everyone in the industry knew what was going on 10 years (and more) ago, even the FSA, so, for the FSA to shut the stable door at this very late stage is pure hypocrisy on their part.

Surely if the FSA could manage a little consistency RDR would compel banks to charge explicitly for all their financial services, including current accounts.

As a Lloyds customer of nearly 50 years I would happily pay for the services I want, rather than put up with their ludicrous adverts for fatuous services that defy description!

PPI is not an intrinsically bad product. The real problems are:-

1. the way in which it's been flogged indiscriminately, en masse with

2. little or no effort made to establish or to record suitability (which is why so many complaints are all but impossible or simply not cost-effective even to try to defend), and

3. what appears to have been an almost total lack of regulatory oversight.

So what for some, possibly many, people might well be an appropriate and potentially valuable product will now cease to be recommended and/or become almost impossible to find. Will that be a good consumer outcome?

On the basis that the CMC's are always looking ahead for the next opportunity to make money, the next wave of complaints a few years down the line may well be based on the fact that PPI wasn't even mentioned, let alone recommended. As a result of this omission and of Mr & Mrs Jones not even having been made aware of PPI, they lost their home in the wake of Mr Jones having been made redundant. That's an undeniably bad consumer outcome arising from the provision of incomplete and thus negligent advice. Had our clients (i.e. those of the CMC) been properly informed as to the availability of this potentially valuable product, they would have wished to take out a suitable policy to protect the family home which they've now lost. Ergo, the bank is at fault and must pay recompense. You can see it happening, can't you?

So the banks will become a target for CMC's all over again not because they mis-sold PPI but because they didn't even mention it.

If the banks want to avoid this next round of complaints, it will behove them to make sure they explain and discuss PPI (and record having done so) as part of the process of arranging every single mortgage, even though they'll no longer be able actually to sell it. It would be dangerous not to. And all because of regulatory negligence on the part of the FSA in terms of having failed to ensure that the banks did the job properly when they COULD sell PPI. Another triumph for what Crash Gordon once described as "a world class regulator" ~ not.

Worse still, nobody at the FSA will ever be held to account ~ they'll all waltz comfortably into new jobs with the FCA whilst, as always, everybody else must pay to clean up the mess.

It is an interesting debate and to continue my sporting parallels - who is to blame - the referee for getting the decision wrong or the football players for piling on the pressure with their desperate continued cheating to try and gain an advantage?

I can put my hand on my heart on PPI and say I never sold it to someone who didn't need it, didn't qualify for it or didn't want it. Sadly many did succomb to the huge pressure from the "Sales managers".

By way of an example I was put under the microscope in front of my peers with the suggestion that my ratio of only 1 in 10 endowment mortgages versus repayment mortgages 9 outof 10 was "wrong". I was told it should be 50/50 split.

Now the Bank knew what the FSA would say about it, but, the Bank wanted to try to gain an advantage, they were cheating and hoping the FSA as 'referee' wouldn't catch them at it.

So who do you blame, the FSA for not spotting them or the people that actually took the action?

@ Christopher Petrie - If banks are forced to charge their customers for their current account, then companies should be forced to offer their staff payment in cash. Before the surge in free banking, many were paid in cash, negating the need for a bank account at all. Now we have to have an account in order to be paid our wages, our salaries and for paying bills and such.

All of which I see as a massive step backwards, but I for one think that a well managed bank should not need to charge in order to make profit. Their profit comes from lending our money out to others and in the main part of current accounts not paying any interest, or at best a very minimal amount...

@UFSONF - agree completely

The United Kingdom is the only country on this planet where "free" banking is the norm and expected as standard. I suspect the rest of the world is ahead of us on this one.....

Because the rest of the world is doing something, what the UK is doing must be wrong... What is the rest of the world's solution to those that don't wish to pay the banks? What is their alternative?

Free banking should be the norm for a basic current account that allows money in and out. They can then charge whatever they want on fancy accounts with whistles and bows, but there should always be a basic account that allows money in and out, without charge... It's not about getting something for nothing, it's about not being obliged to pay something for very little, without choice.

What are the credible arguments for charging?

I thought the simple premise of free banking was that provided you maintain a credit balance, the bank keeps the interest (which would otherwise be assessable for tax) in lieu of levying a specific charge for running your account. With Nationwide, I get free banking AND a modicum of interest on my credit balance. Unless you maintain a very large credit balance, this seems to me to be a pretty equitable arrangement. Does such a system really need to be outlawed?

I left Lloyds TSB 13 years ago because I felt the incentives and target setting was unethical. I hit targets through hard work and good service, my loan insurance share was low because I explained the product and let the client decide, I didn't make it conditional and I didn't hide other product sales into the package. I was a manager of a successful branch, I wasn't under any disciplinary because of the overall sales but questions were always raised as to why conversion was lower than targeted. As proved, teh targetys were clearly wrong and I genuinely felt and knew it was wrong then. I am surprised it has taken this long to come out and I know staff have suffered stress and worse due to the pressures put on them let alone Customers. Shareholders will have to consider the impact reduced sales income will have, like many in Financial Services, staff will be cut I am sure to address costs and fees may go up for Customers but I hope we get back to ethical banking where service counts, Customers are valued and we get to a situation where they can move easily if they feel they are not.

The reason the disgraceful rip-off practices of the banks have taken so long to "come out" or rather to be taken any notice of by the regulator is that the FSA has for years been resolutely turning a blind eye and concentrating its firepower on softer targets (i.e. the IFA sector). But the IFA sector, it now turns out, despite being far from perfect, poses vastly lesser risk of poor consumer outcomes than the way in which the banks have been allowed to get away with operating for decades. The licence enjoyed by the banks can only be due either to cronyism or instructions from the Treasury (of which the FSA would have us believe it's independent). Both are totally wrong.

Only now that the clamour of protest has reached such levels that even the FSA can no longer ignore it is action being taken. But it's the same old story ~ lots of big fines being dished out, orders to pay redress, lots of soapbox grand-standing about how the banks must change their culture. But nobody within the FSA being held in any way accountable.

For its part, the new government has decided that it needs to be seen to be taking tough, decisive action against this institutional basket case, so it's declared that the dysfunctional and failed FSA will be scrapped. Sounds big, bad and tough, doesn't it? In practice, all it means is that what we know currently as the FSA is to be partitioned into the FCA and the PRA, with very largely the same people doing the same jobs on the same salaries at the same (£68.5m p.a.) offices and a bit of inconsequential tinkering with the FSMA. Nothing about greater accountability of any individuals. There's nothing about proper adherence to the Statutory Code of Practice for Regulators, nothing about the "new" regulator making any economies (such as moving 80% of its staff outside London) and nothing about submission to any sort of Independent Regulatory Oversight Committee.

Everyone else must change, must improve, must offer better value for money, must work to higher standards of professionalism, must observe more stringent standards of compliance and, so it seems, we're all going to have to pay even more for the privilege.

And just what has the FCA undertaken to do better than its totally discredited predecessor? To cost less? To use its resources more prudently? To be more accountable? To be fairer? To listen to the industry? To publish for all to see and to debate in open forum all feedback received in response to its declarations of intent (I hesitate to call them consultations)?

Martin Wheatley has declared an end to hindsight reviews. Is this a promise or merely a non-binding aspiration? It will be interesting to see which one it turns out to be.