Matt Scuffham London
A “TOXIC culture” that had cost British banks £38.5 billion (R667bn) in fines and compensation over the past 15 years would take a generation to fix, an independent think tank said on Tuesday.
Britain’s banks have been hit by costly scandals including the mis-selling of loan insurance and complex interest rate hedging products.
A report into the culture of British retail banking by think tank New City Agenda and Cass Business School said aggressive sales practices took hold over two decades, with some branch staff receiving cash bonuses, iPods or even tickets to the Wimbledon tennis tournament for hitting sales targets.
“A toxic culture which was decades in the making will take a generation to turn around,” said Conservative legislator David Davis, the chairman of New City Agenda.
The think tank recommended the new Banking Standards Review Council (BSRC), launched this year, should talk to branch staff to check they are not under pressure to sell and should report annually to parliament’s treasury committee, which oversees the work of the Finance Ministry.
Speaking at a parliamentary event to launch the report this week, the BSRC’s new chairwoman, Colette Bowe, vowed to maintain the independence of the new body, which is funded by banks, and to name and shame bank staff who misbehave.
“Independence and transparency are crucial. People are going to be named. We will report in public what we find,” Bowe said.
Despite having the support of Britain’s biggest banks, the BSRC has yet to confirm the backing of large international banks with operations in London.
Bowe said that talks with those institutions were “positive and constructive”.
The think tank’s report said that the mis-selling of payment protection insurance (PPI) alone cost banks at least £27bn in Britain’s costliest consumer scandal.
The high-margin products were meant to cover repayments if customers fell ill or were out of work but were often sold to people who did not need them or would be ineligible to claim.
The biggest sum set aside by a bank for PPI compensation is the £11.3bn at Lloyds Banking Group, followed by Barclays (£5bn), Royal Bank of Scotland (£3.3bn) and HSBC (£2.5bn). – Reuters