Survey finds bank staff still feels pressured to sell unsuitable products

The Guardian reports that a survey of bank staff performed by a UK consumer group, Which?, found that the bank staff still feels pressure to sell products even if they are unsuitable for the client.

In his Bloomberg column, Jonathan Weil linked this pressure to sell unsuitable products to why Glass-Steagall separated commercial and investment banking.

There’s a better argument for separating securities firms from commercial banks: to protect consumers. 

The banking industry has a long history of preying on unsophisticated depositors by selling them garbage investments without regard to suitability. 

 From the Guardian,

Staff at Britain's big five banks feel under pressure to sell to customers, according to research by Which?, despite promises the institutions have changed their ways and removed the incentive schemes that fuelled the mis-selling scandals of the past.

Interviews with more than 550 frontline staff found that despite the banks paying billions of pounds in compensation to consumers for mis-selling insurance and investment products, nearly half of those employed in a sales role felt they were expected to push products, regardless of whether they were appropriate to the customer....

"Our survey reveals the stark realities of the sales culture that still exists at the heart of the banking industry," Peter Vicary-Smith, chief executive of Which?, said. 

"Senior bankers say the culture is changing, but this shows it just isn't filtering through to staff on the frontline who remain under real pressure to put sales before service, even after incentives are taken away." 

The survey comes as banks are still dealing with the fallout from the scandal of mis-selling payment protection insurance, which resulted from years of offering staff heavy incentives to push the cover. 

Although many of the banks have since adjusted their incentive schemes, Which?'s research suggests they are still operating sales drives that focus on numbers rather than customers, with four in 10 of those questioned saying that they took part in "power hours" where they had to make a certain volume of sales within a designated period of time. 

"This proves the need for big change across the industry and for bankers to put customers first, not sales," Vicary-Smith said. "We're calling on the banks to be much more transparent about their sales targets and incentives....

Please note that once again transparency is being called on as sunshine is the best disinfectant for bad behavior by bankers.