A ‘toxic’ and ‘rotten’ culture inside British retail banks that led to scandals will take a generation to undergo a radical overhaul, finds a joint study by independent think tank New City Agenda and Cass Business School.
According to the report, the toxic sales culture which engulfed retail banking over two decades saw staff in some branches getting cash bonuses, iPods, or tickets to Wimbledon for attaining sales targets.
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The report estimates that scandals created from poor bank culture have cost banks and building societies at least £38.5bn in penalties and redress, with at least £27bn of the penalties due to mis-selling of personal protection insurance.
The high-margin products were aimed to cover repayments if customers fell ill or were jobless but were often sold to consumers who were ineligible to claim or did not require them.
It was further found that banks have received 20.8 million complaints following the financial meltdown.
Professor Andre Spicer, of the Cass Business School, said that a few banks have made some progress in changing the aggressive sales culture.
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By GlobalData"Regulation has improved, and big banks have all implemented new programmes to improve their cultures. Smaller banks and challenger banks are beginning to offer the customer real choice, and often have healthier cultures," said Spicer.
However, he added that some culture-change measures are short-lived, and a plenty of work still needs to be done.
The think tank recommended that the new Banking Standards Review Council (BSRC), launched this year, should talk to branch staff to see that they are not under sales pressure and should report to the parliament’s Treasury Committee annually.
