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Did the banks ever have our trust? Citizens Advice boss slams banking chiefs, warning them to stop penalising loyal customers

Citizens Advice chief Gillian Guy has slammed Britain’s retail bank bosses, claiming they must stop moaning about losing public trust which she says they never had.

Guy was speaking directly to retail bankers at the British Bankers’ Association conference last week and struck a chiding note.

She claimed that not only did the banks never really have the public’s trust, but also that massive consumer advertising campaigns ‘claiming at once to be best friend and guardian’ served only to ‘fuel deep scepticism’ among consumers.

Citizens Advice chief Gillian Guy has slammed Britain’s retail bank bosses

She said: ‘The banking industry has a clear sense that it does not hold the position in society it once did. This is often expressed by asking why the public no longer trust or understand it and has led to a bit of a mission – to regain or rebuild trust.

‘In my view – it is a search to recover something you never truly had. I believe we have mistaken deferential treatment (based on faith – or sometimes, fear ) for trust – which is far more of an emotional buy-in.’

She said: ‘It is true that bad things happened – and indeed continue to – which seriously damaged the image and reputation of the industry, but there was a broader change going on too.

‘Banks along with others – even doctors and lawyers – suffered a loss of deference attached to their positions of authority as consumer confidence and expectations of service providers, massively increased.’

Shattering trust in financial services

Northern Rock suffered mass withdrawals and customers queuing around the block to rescue their savings from the ailing bank

Banks lost face when the financial crisis hit in 2007, with Northern Rock suffering mass withdrawals and customers queuing around the block to rescue their savings from the ailing bank.

Then in 2008 Halifax Bank of Scotland had to be bailed out by Lloyds Bank, which subsequently and collectively had to be rescued by British taxpayers, who have only just returned the bank to private ownership in the past month.

Meanwhile Royal Bank of Scotland is still majority-owned by UK taxpayers, and has lost more than £58billion since its £45billion bailout in 2008. Shares are still trading at around 50 per cent less than the 502p a share paid by the government nine years ago.

The Libor scandal, PPI mis-selling scandal and multiple high profile criminal investigations into some of the banks’ most senior managers have dogged the sector since.

At the same time, consumers’ awareness of some of the ways in which the banks made money in the run-up to the crash has risen significantly, with sub-prime mortgages and banker bonuses suddenly splashed across the front pages, even of tabloid newspapers.

Talking the talk, but not walking the walk?

All of the major retail banks have since spent millions running advertising campaigns designed to redefine their role in society, attempting to show support for British families and small businesses.

Lloyds Bank has an ad campaign called ‘for your next steps’, the most recent of which features the slogan ‘by your side’.

Barclays recently ran an ad campaign advertising its family springboard mortgage with a voice over from family favourite actor Jim Broadbent, which concludes: ‘For all of life’s little challenges, you can always count on your bank.’

HSBC meanwhile has linked its mortgages with supporting parenting in its latest advert featuring a father whose daughter is determined to become a champion swimmer.

NatWest’s advertising slogan is ‘we are what we do’ while Santander’s is ‘here to help you prosper’.

But Guy has dismissed these efforts as displaying ‘exaggerated sentimentality and sincerity’.

‘At the heart of being trustworthy is openness and honesty,’ she said. ‘Put at its simplest this amounts to: say what you mean and do what you say.’

Guy said banks now need to establish that the industry really is trustworthy, but that continuing to take advantage of customers by rewarding loyalty with higher charges than are given to new customers was not the way to go about it.

Instead, she told banking chiefs this could begin to be achieved through working to produce evidence that banks were driven by a ‘higher purpose’ than maximising profits from their customers.

She gave the following examples as ways to help develop customer trust:

  • By how you choose to use your deep – sometimes intimate – understanding of consumer behaviour to help – not exploit
  • By the transparency and clarity of communications and terms and conditions – so consumers can make informed choices
  • By what you do proactively to move people to better deals
  • By your offer of support and advice to avoid early warning signs developing into problems
  • And by targeted support and protections for your most vulnerable customers

‘This is not to take away from individual personal responsibility, but gives consumers a fighting chance to exercise it,’ said Guy.

Banks told: Stop penalising loyalty

There has been increasing criticism of banks that penalise customers for remaining loyal to them.

Most recently this criticism was levelled at banks that let their customers pay far more interest on their mortgage than they need to and fail to tell them how much they could save by switching.

Guy told banking chiefs: ‘Customer loyalty is an issue of great concern to us and it should be to you; loyalty is laden with sentiment and value judgements. But loyalty is supposed to be rewarded.

‘People who stick with a provider expect to be put first. Unfortunately at Citizens Advice we all too often see the opposite: longstanding customers paying more, and being treated worse, than new ones.

‘Next month we will report on the fate of loyal customers whose fixed rate mortgages come to an end – it’s not a pretty picture. For example, 85 per cent of people on standard variable tariffs would be better off on a fixed deal.’

Guy called on banking bosses to instill radical change: ‘Voluntary action prompted by responsibility and integrity is far more effective – and results in a race to the top rather than bottom.

‘You should care so you can turn the potentially onerous social responsibility to your advantage, to shore up the fragile reputation of the industry and lay those foundations for trustworthiness.’