Bank culture ‘will take generation to change’, says report
A “toxic” and “aggressive” culture inside British banks that led to scandals such as mis-selling will take a generation to change, a report says.
A culture that was decades in the making will take years to unwind, the joint study by Cass Business School and think tank New City Agenda concludes.
It estimates that poor standards have cost the UK industry £38.5bn in fines and customer redress over 15 years.
The banking industry said it was “striving hard” to rebuild trust.
The report found that at least £27bn of the £38.5bn in fines was due to mis-selling of personal protection insurance (PPI).
In the six years between 2008 and 2014, banks received 21 million complaints, it said.
Over two decades “an aggressive sales culture took hold in retail banking,” with staff in some branches receiving cash bonuses, iPods, or tickets to Wimbledon for hitting sales targets, it said.
Those that failed to hit targets “were humiliated by having cabbages and other vegetables placed on their desks,” it added.
“A toxic culture which was decades in the making will take a generation to turn around,” said Conservative MP and New City Agenda co-founder David Davis.
Archbishop of Canterbury Justin Welby, who sits on the New City Agenda advisory board, said: “It is clear that much more needs to be done by all stakeholders for trust to be restored in our financial institutions.”
The archbishop said that “huge fines” levied on banks in November in connection with attempted foreign exchange rate manipulation “illustrate the length of the journey of culture change that still needs to be travelled”.
Many banks have culture change programmes underway, the report added.
The report’s main author, Professor Andre Spicer, of the Cass Business School, said that some progress had been made in changing “a toxic sales culture”.
“Regulation has improved, and big banks have all implemented new programmes to improve their cultures,” he said.
“Smaller banks and challenger banks are beginning to offer the customer real choice, and often have healthier cultures.”
“Many culture-change initiatives are fragile, and their success is not ensured. It’s clear to us that much work still needs to be done,” he added.
The British Bankers’ Association (BBA) said that banks had made some progress in rebuilding public trust.
“There has been some important headway, with a new regulatory system, important reforms to pay and measures to ensure the British taxpayer will not have to shore up struggling banks in the future,” a BBA spokesman said.
“It’s very important that public confidence in this vital part of our economy returns, but that takes time and there is still more to be done,” the BBA added.
There have been numerous calls for a change in banking culture since the 2008 financial crisis exposed wrong-doing and misdemeanours.
Last month, Bank of England governor Mark Carney said that some top bank executives had “got away without sanction” and were “still at the best golf courses”.