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Banking Commission calls for removal of commission for frontline bank staff

The Which? Future of Banking Commission has called for the complete removal of commission for frontline bank staff and enforcement action against senior management in firms putting excessive sales pressure on workers.

The Commission delivered its findings to the Government today, which aim to “put ordinary people and society at the heart of a reformed banking system”.

It recommends that remuneration for frontline and branch staff should not be linked to sales, with no commission or bonuses received for selling products.

The Commission has urged the FSA to take enforcement action against senior management for any remuneration structures or sales targets that contribute to misselling, by putting excessive pressure on frontline staff.

It also calls for a rule that bans banks that advise clients from trading any form of securities, saying this would address conflicts of interest within investment banks.

The cross-party Commission was developed by Which? following a proposal from former Treasury select committee chairman John McFall, who wanted to ensure that the public had an opportunity to voice their opinions about the future of banking.

It was chaired by Conservative MP David Davis and members included McFall, Business Secretary Vince Cable, Which? chief executive Peter Vicary-Smith, former Schroders group managing director Philip Augar, Clare Spottiswoode, Hermes Focus Asset Management chairman David Pitt-Watson and economist Roger Bootle.

The Commission gathered evidence from consumers and consumer groups, regulators, banking groups and business leaders including Mervyn King, Lord Myners and Lord Turner.

It is calling for living wills detailing how customers would be treated if a bank fails and improvements to depositor protection including a new class of ‘safe haven’ accounts.

It also wants restructuring of the banks so that if one does fail, it does not damage customers or the economy, regulation that increases competition among banks and rewards for senior executives based on long-term business performance and shareholder return.

Davis says: “We have made recommendations to minimise the conflicts of interest inherent in banking and to limit the liability of the taxpayer and thereby reduce the risk to the economy.

“We also propose a structure and regulatory regime designed to entrench a stable and competitive banking sector for the long term.”

Which? chief executive Peter Vicary-Smith adds: “Banks cannot be allowed to go back to business as usual. We must never again be faced with a situation where consumers pay the price for the failures of the banking system.

“A major change in the structure, operation and culture of our banks is needed if we are to rebuild the trust in our banking system that was so badly damaged by the financial crisis.”


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. After over 30 years in banking I and no doubt many others was brought to the verge of a nervous breakdown by constant sales pressure.I would welcome the return to the days when banks were genuinely concerned with the financial welfare of their customers and when all their staff could add two figures together without the use of a calculator.

  2. Sidney Skinner 13th June 2010 at 9:55 am

    These recommendations would appear to be fine the only problem I have with them is that, to my eyes, there appears to be at least one loophole which the banks will use to their benefit.

    Also I believe that, in these days of arrogance, greed and ignorance, the account holder needs protection from the Banks who are less than honest with their customers especially over charges of whatever nature.

    I think, as well, that the ‘Rank’ of C.E.O. can be dispensed with, an action which would save the majority of banks a small annual fortune and that the Chairman and Senior staff are employees who have worked their way up thru the ‘Ranks’ within their bank and NOT a ‘spiv’ who has been pulled in from God knows where.

  3. Probably some wishful thinking here I’m afraid to say. Much as I would love to think Banks could be returned to the time when customer service was the most important thing the Bank staff are now full of management people that are salespeople and it would need a huge change in staff and their attitude.

    In my time at LloydsTSB the person promoted to the management position was always the person with the ‘best sales record’ and not necessarily the most rounded person with the skillset to be a manager of people.

    The result is that they have no management skills left in the company – all they know is how to use the ‘big stick’ approach to management. As the football commentators say some staff need the arm around the shoulder and others need the hairdryer treatment, the skill of the manager is to know which people to use which approach with and when it is appropriate.

    Although there are some exceptions, LloydsTSB is full of managers who just use the hairdryer treatment on everyone all the time.

    A recent example of this saw a former collegue of mine told he was not referring enough customers to the Regulated Financial Adviser for Life, Pension and invetsments. Having been told off by his manager the manager actually made the Financial Adviser pace the floor outside the interview room near the end of an appointment in an attempt to force the customer into an appointment.

    These type of tactics are commonplace now in banks where historically these tactics were associated with other industries, I can’t see the government ending these practices – much as I would like to see them ended.

  4. Michael Fallas 14th June 2010 at 9:37 am

    The assumption that commission is wrong is a false one. There is nothing wrong with commission as a method of payment it is just the amounts are rarely justified for the work done.

    If commission were the same per product with set amounts for small and large investments decided by an independent body then there is no reason why that could not work as well as paying by fee.

    The assumption that paying a fee is better can be equally abused as well. Who is going to say what a fair fee is or not, some will charge more than others for the same advice and product ?

    There is however little doubt the banks have been making hay and putting intense pressure to sell on their stafff which the FSA simply ignored the issue for years and years. Unfortunately the FSA don’t have any responsibility for their own mistakes so they too can make hay while the sun shines and we pay either way.

  5. This is a good thread and the comments made hitherto are I believe ‘spot on’.

    With regards to the proposals they may be genuine but naive and labour under the missaprehension that the receipt of commission is bad. Where do they get this from, incentives are fine as long as they are regulated (small R) and within reason as Michael says. They also fail to recognise that managers carry out the pressure verbally and not in writing and so you can have all sorts of rules and regulation but untill the offenders are routed out and current target structures are banned there will be no change in what is done.

    What it shows of course is that the people charged with the task of sorting out the mess do not have a deep understanding of the area in which they are asked to make a judgement, which makes the task very difficult indeed.

    The comments made especially with regards to LTSB agree with comments made to me by others who have worked there. Now which bank has the greatest number of complaints again?

  6. We have just employed an ex employee from Santander and the tactics they are using to sell, sell, sell are really scary. She was taken over by Santander after being with BBBs for 25 years. In the last 6 months nearly all of BBBs staff have now left as they are completely disgusted with the so called sales methods. What on earth happened to TCF?

  7. Georgia Duncan 27th June 2010 at 2:34 pm

    I can indeed relate to many of the comments, I worked in a Natwest branch for 2 years and the sales pressure from the senior bank manager was beyond intense and bordered on intimidation, bullying and humiliation. Daily conference calls between staff and senior management would involve naming and shaming those who had not managed their unrealistic target for the day and then making them explain themself in front of everyone else on the call.
    We constantly were threatened with formal disciplinary and potential dismissal for not hitting sales targets and this was a constant worry.

    The amount of misselling that resulted from the pressure was huge and management seemed to encourage misselling practices. There was no come back on staff who mis sold and the high sellers were the ones who went on to be promoted.
    I worked at a city centre branch and there were 13 sales staff. However, only 2 customer service officers were employed and they dealt with all the complaints. So there was a wait of one hour for a customer to see someone to make a complaint or to do something with no sales opportunity such as register a death. While they sat waiting they saw 13 sales staff hanging around waiting for their next potential sale to walk through the door and not helping them.
    I have since moved to another bank and they are no better.
    There needs to be an end to this sales culture, its not fair on the staff or customers. I feel sick having to go to work because I am so stressed. I break down in tears all the time at work. I have tried to find alternative employment but in this climate the only recruiters interested in me are other financial institutions.

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