Barclays has questioned whether banks should be offering consumers complex products and has suggested a return to simple, “vanilla” product ranges.
At a Parliamentary Commission on Banking Standards joint committee hearing last week, Conservative MP Mark Garnier challenged Barclays as to why it thought interest rate swaps were suitable for small and medium sized businesses.
Barclays chief executive of corporate and investment banking Rich Ricci argued the products can suit some firms, but said a discussion should be had about whether banks should be offering complex products.
Ricci said: “What we have seen is when we do make mistakes it is incredibly expensive. We need to take a step back and ask whether we should just be offering a very vanilla, very simple set of products that customers can agree to and understand. And if they want something more bespoke we just tell them we do not do that. Those spectrums are on the table and I think it is important to consider this given how expensive some of these mistakes are.”
Ricci admitted there were “some cultural failings” within Barclays but said most staff “want to do the right thing”.
Barclays is one of 11 banks that have agreed with the FSA to pay redress to SME customers missold interest rate swaps. The bank was also fined £290m in June by UK and US regulators for manipulating Libor.
Evolve Financial Planning director Jason Witcombe says: “Banks will offer whatever makes them the most money. But banks have to weigh up whether making lots of money is worth the reputational risk when these things inevitably blow up.”