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[ 2010-06-22 ]

Bank staff ordered to push risky products
Gillian Kirk, 54, used to work for HSBC and is now revealing
how staff are incentivised to sell products.

By Matthew Lloyd for The Times

London (UK) – 19 June 2010 – The Times - Two whistleblowers
at high street banks have revealed to The Times how staff
are encouraged to sell overpriced and inappropriate
financial products, and the tactics used to dismiss
legitimate customer complaints.

If staff do not meet specific targets, they do not receive
bonus payments and may face disciplinary action, the
employee at Santander and a former employee of HSBC suggest.

Critics say that the culture at banks encourages staff to
prioritise profit over customer service. Peter Vicary-Smith,
of Which?, the consumer champion, says: “The way many banks
treat their customers is simply unacceptable. We must put an
end to the culture where customer service takes a back seat
to sales targets.”

This week Which? called for profound reform of the banking
system after its Future of Banking Commission, which
gathered evidence from consumers, regulators and banks,
found serious and systematic failings in the way that banks
treat their customers. Which? is calling on banks to stop
paying sales commission to staff, to handle complaints
fairly and to improve the transparency of products.

Customer service
Richard Young (not his real name) has worked for a Santander
call centre in the north of England for six months, earning
£12,700 a year and up to £2,000 in bonus payments. He says
that the average call time has to be no longer than 270
seconds for workers to receive their quarterly bonus, a
practice that encourages staff to fob off customers, even if
they have complex inquiries. After a call is finished,
workers have 25 seconds to make notes on the customer’s file
before they take the next call.

“We are basically encouraged to get rid of customers on the
phone as quickly as possible,” he says. “There is no
incentive to help customers or to get to the bottom of their

Santander has more than 25 million customers after taking
over Abbey, Alliance & Leicester and the savings business of
Bradford & Bingley, but the bank has been criticised heavily
recently for poor customer service. Santander is regularly
found at the bottom end of the Which? customer satisfaction
tables. The Financial Services Authority (FSA), the chief
City watchdog, recently rebuked five unnamed banks for the
“unacceptable” way that they handle customer complaints and
ordered them to make “major changes”. Yet Mr. Young says
that when customers call to complain, staff are under too
much pressure to deal with them quickly and so they are
unable to resolve matters properly.

The FSA criticised the way that bank staff issue multiple,
repetitive responses to customers, forcing them to restate
complaints a number of times. At some banks, staff even
receive bonus payments for rejecting valid complaints.

A spokesman for Santander says: “The information provided by
our staff member is incorrect. Bonuses for contact centre
advisers are paid based on achievement of factors including
customer satisfaction and resolution.”

Selling products
An internal memo leaked recently by a Barclays sales manager
reveals how staff in branches are encouraged to sell risky
investments and other profitable products, such as loans and
credit cards.

A Barclays salesman will earn only 18p for each £1,000 saved
by customers in a cash Isa, but this increases to 70p for
each £1,000 invested in the stock market. Salesmen who
persuade a customer to sign up to the Barclays Private
Banking investment service earn £49.

Times Money has received many letters from elderly or
vulnerable readers persuaded to move money from safe bank
accounts into risky investment bonds or structured products
linked to the stock market. These are sometimes customers
who are risk-averse and who do not understand the products.

Gillian Kirk used to work in a Midland Bank branch, which
later became HSBC. She left the bank two years ago and
recently gave evidence at the Future of Banking Commission,
where she discussed the pressure on staff to meet their
targets. “When I worked in branches in the 1990s, I was
given prizes such as a vacuum cleaner and camera when I met
sales targets,” she says. “Commission-based sales is nothing
new, but the pressure on staff has intensified. Targets are
harder to reach while the products have become more

Sales targets played a big part in recent mis-selling
scandals, including payment protection insurance (PPI) and
precipice bonds. Staff at HFC Bank, which is part of HSBC,
were told to ensure that PPI was bought with 80 per cent of
loans. If the target was met, it could quadruple the
employee’s bonus. PPI is very expensive and many people who
were mis-sold the insurance would never be able to make a

“Bank staff are encouraged to sell products, rather than
provide advice that is suitable for the customer. The poor
quality and suitability of the product often does not become
apparent until many years after it is sold,” the commission

From 2013, the FSA will ban advisers from receiving
commission on sales of investment products. However, these
rules will apply only if giving explicit “advice”. Staff
will continue to receive commission for other types of
products, such as credit cards, fee-based current accounts
and insurance. A Barclays spokesman says: “Our incentive
scheme means that staff are rewarded for ensuring customers
are well informed, well advised and receive the products
that are most suitable for their needs.”

Bank charges
Mr. Young says that customers in financial difficulty are
treated badly by Santander. A customer who goes into an
unauthorised overdraft by a few pounds is usually charged
£60 (£25 for going overdrawn and a £35 “paid item charge”).
If further transactions are made, the charges add up to
hundreds of pounds a month.

Mr Young says that it is company policy to refund only one
overdraft charge a year if a customer complains, even if the
customer is on benefits and struggling with debts. This
flies in the face of the Lending Code, which states that
customers in financial difficulty should be treated

“Customers who rely solely upon income support or incapacity
benefits can see this money entirely consumed by charges,”
Mr Young says. “Those in dire straits regularly contact us,
only to be informed that they have already had a charge
refunded in the past 12 months, so there is nothing more we
can do.”

A Santander spokesman denied that it was company policy not
to refund customers in financial difficulty, saying: “If
customers are in financial difficulty we will help them gain
control of their finances and refund 100 per cent of their
charges if appropriate. We will also discuss with them
whether they would be better off with a different account.”

Staff fraud inside banks has soared over the past 12 months,
yet our Santander whistleblower says that it is all too easy
for staff to obtain a customer’s credit or debit card
details. “It would be very simple to defraud a customer,” Mr
Young says. “We have all account and card details on screen
— everything except PINs and passwords. We know their sort
code, account number, card number, start and expiry dates
and the three-digit security number.”

Last year there were 121 cases of proven fraud among bank
employees, compared with 21 in 2008, according to Cifas, the
UK fraud-prevention service. Most of these cases involved
withdrawals from accounts. Experts say that the real number
of “inside jobs” may be much higher because the crime is
hard to detect. A Cifas spokesman said: “The increase points
to the presence of organised criminals planting people
within organisations, or bribery or threats against staff to
reveal information.”

A spokesman for Santander says: “At a contact centre,
naturally staff need access to customers’ basic account
details, including information on debit or credit cards. The
three-digit card security code is not available to
employees, and is used for customer verification only. Any
suspected internal fraud or data compromise will always be
investigated thoroughly.”

Case study: ‘Customers are passed from pillar to post’
Gillian Kirk has worked in banking for more than 30 years —
first in branches at Midland Bank, where she received prizes
for meeting her sales targets, and then at the HSBC head
office. She says that customer service has deteriorated
rapidly over the past ten years and there is now too much
pressure on bank staff to sell products and dismiss

The 54-year-old, who retired two years ago, says: “When I
worked in branches, I took personal responsibility for
resolving a complaint. These days customers are passed from
pillar to post and forced to explain their problem to five
or six people before it is resolved.”

Ms Kirk is also concerned that products have become too
complex and that bank staff do not receive adequate training
to give customers proper advice.

“There is enormous pressure on branch staff simply to sell
products and meet targets,” she says.

A spokesman for HSBC says: “The scheme where Midland Bank
offered prizes to staff was phased out in the early 1990s.

Staff bonuses are now based 50 per cent on the branch’s
performance and 50 per cent on a staff member’s sales and
customer service performance.”

Future of Banking Commission

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