FSA investigation underlines sales culture in banks

The review looked at several banking groups responsible for over 70% of the complaints firms receive and report to the FSA and over 60% of those resolved by the Financial Ombudsman Service (FOS).

It found poor standards of complaint handling within most of the banks assessed, including:

• A lack of senior management engagement and accountability for the delivery of fair complaint handling;
• Poorly designed staff incentive schemes that made branch staff reluctant to pay redress to customers, even in situations where the bank was at fault;
• Poor quality complaint handling by staff in branches and general call-centres leading to inadequate investigations, poor decision making as to the outcome of the complaint and unsatisfactory correspondence with customers;
• Complaint handling procedures that led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank;
• The failure of banks to learn from previous complaints and to make changes to prevent similar complaints arising in the future.

Commenting, Which? chief executive, Peter Vicary-Smith, said:“This is another damning indictment of the banking industry, many of whose members consistently put sales before customer service and reflects the evidence consumers presented to the Future of Banking Commission.

“Bonuses should be linked to treating customers fairly and the resolution of complaints, not to sales. What’s more, consumers have the right to know which banks the FSA is referring to its enforcement division.

“If the UK’s banks want to win back the public’s trust, then they must fundamentally change they way they treat their customers.”