More mis-selling among high street banks

Scandal over fee-charging accounts lower trust, again.

The PPI mis-selling scandal has threatened to engulf the packaged account offerings of the UK’s high street banks.

In February of 2012 it was reported that the fee-charging account market in the UK was booming, worth nearly £2bn and rising. With regulation on the up and a low interest margin rate adding pressure to an industry facing crisis after crisis, banks turned to packaged accounts as a source of regular, easy cash.

Unfortunately they may have taken to them with a little too much enthusiasm, with banks being accused of signing up people who have no use, and may not even be eligible, for the features of their packaged accounts.

Amid claims of aggressive sales practises Lloyds TSB pulled their packaged accounts from sale in their stores and over the phone from the 1 January 2013. The AVAs are still available for customers to sign up to online, far removed from pushy sales staff.

According to Lloyds the reason for removal of their bundled accounts from sale in-store is that they wish to “harmonise the way we sell bundled accounts across all brands within Lloyds Banking Group, to align the sales process with that currently used within Halifax.”

Halifax continues to offer its packaged account while the sales process is “harmonised” across the group.

A December 2012 Which? investigation of more than 500 front line bank staff showed that there is still high pressure to make sales in Lloyds, Barclays, RBS, HSBC and Santander.

Over half (65 per cent) of bank staff in sales roles and have sales targets say there is now more pressure than ever to meet the goals set for them.

The report showed that mis-selling of products is rampant in all of the big five high street banks. Nearly 50 per cent of staff in sales know someone at the bank who has mis-sold a product in order to meet their targets and 40 per cent say their targets encourage employees try and get the sale when it's not appropriate.

Metro Bank, which turns three in March, removed their packaged account offering in December 2012. Metro Bank Plus was pulled because the fledgling bank “considers its market proposition on an ongoing basis to ensure that it gives the best value to its customers.” Meaning the packaged account was not giving value to customers because no one who bought it (most commonly, it seems, suggestible little old ladies) could use the features.

Santander, who also fled from packaged accounts before the mis-selling scandal consumes them, ditched their packaged accounts in March 2012 in favour of the “simplified” 123 Account. Despite this being a paid current account with bundled features, Santander maintains it does not count as a packaged account.

The ongoing mis-selling scandals are a result of banks who have not yet adjusted to life post-2008 financial crash. Banks who believed the good times and endless credit would never end and that people would happily pay out £10 a month for products they were unlikely or unable to use.

While the mis-selling of packaged accounts won’t bring down the economy, it will only further peoples belief that banks are not your friend and are not to be trusted.

Photograph: Getty Images

Billy Bambrough writes for Retail Banker International at VRL financial news.

Photo: Getty
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Zac Goldsmith has bitten off more than he can chew

In standing as an independent, Goldsmith may face the worst of both worlds. 

After just 48 years, we can announce the very late arrival of the third runway at Heathrow. Assuming, that is, that it makes its way past the legal challenge from five local councils and Greenpeace, the consultation with local residents, and the financial worries of the big airlines. And that's not counting the political struggles...

While the Times leads with the logistical headaches - "Heathrow runway may be built over motorway" is their splash, the political hurdles dominate most of this morning’s papers

"Tory rebels let fly on Heathrow" says the i's frontpage, while the FT goes for "Prominent Tories lead challenge to May on Heathrow expansion". Although Justine Greening, a May loyalist to her fingertips, has limited herself to a critical blogpost, Boris Johnson has said the project is "undeliverable" and will lead to London becoming "a city of planes". 

But May’s real headache is Zac Goldsmith, who has quit, triggering a by-election in his seat of Richmond Park, in which he will stand as an anti-Heathrow candidate.  "Heathrow forces May into Brexit by-election" is the Telegraph's splash. 

CCHQ has decided to duck out of the contest entirely, leaving Goldsmith running as the Conservative candidate in all but name, against the Liberal Democrat Sarah Olney. 

What are Goldsmith's chances? To win the seat, the Liberal Democrats would need a 19.3 per cent swing from the Conservatives - and in Witney, they got exactly that.

They will also find it easier to squeeze the third-placed Labour vote than they did in Witney, where they started the race in fourth place. They will find that task all the easier if the calls for Labour to stand aside are heeded by the party leadership. In any case, that Clive Lewis, Lisa Nandy and Jonathan Reynolds have all declared that they should will be a boost for Olney even if she does face a Labour candidate.  

The Liberal Democrats are fond of leaflets warning that their rivals “cannot win here” and thanks to Witney they have one ready made.  

Goldsmith risks having the worst of all worlds. I'm waiting to hear whether or not the Conservatives will make their resources freely available to Goldsmith, but it is hard to see how, without taking an axe to data protection laws, he can make use of Conservative VoterID or information gathered in his doomed mayoral campaign. 

But in any case, the Liberal Democrats will still be able to paint him as the Brexit candidate and the preferred choice of the pro-Heathrow Prime Minister, as he is. I think Goldsmith will find he has bitten more than he can chew this time.

This article originally appeared in today's Morning Call, your essential email covering everything you need to know about British politics and today's news. You can subscribe for free here.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.