lloyds-scandal-28-million-fineAt the height of the banking crisis of 2008-9, the satirical magazine Private Eye, got to the nub of a phenomenon that seemed to have brought an entire industry to its knees.

It printed a spoof  “spot the odd man out” quiz that  listed the names of the chief executives and chairmen of bust banks and building societies such as Northern Rock, Bradford and Bingley, RBS and HBOS.

The last name on the list was – Terry Wogan.  He was the odd man out, obviously. But why?

Because he was the only person on the list to actually have a qualification in banking, he’d earned during a stint as a trainee at the Bank of Ireland before finding fame as a broadcaster.

If only Lloyds Bank, had had a few Terry Wogan’s on its board it probably would not be in the humiliating position of having to pay the biggest fine ever imposed by the financial regulator for pressuring customers into buying products such as shares ISAs they did not want or need.

The fine of £28 million will, however, be dwarfed by the £100 million that Lloyds is expected to have to pay in compensation to customers ripped off by target-chasing, commission-greedy middle managers.

That’s on top of the £8 billion already set aside by Lloyds to compensate victims of payment protection insurance and other £1 million-plus fines for previous bad behaviour.

Together with the recent revelations of the appalling personal conduct and financial ignorance of the former Co-op bank chairman the Rev. Paul Flowers – surely the least qualified person ever to hold such a responsible position – the latest Lloyds scandal serves to darken even further the reputation of a banking industry that was once a by-word for probity and prudence.

At the heart of the regulator’s report on the latest Lloyds scandal was the revelation that the bank’s non-banking top executives had turned its “advisers” into spiv salesmen and put them under intense pressure to either earn big bonuses by meeting whatever insane target had been set them or see their salaries cut by half if they failed.

Some even resorted to buying totally useless products for themselves and their families to try to meet their targets.

This was an inevitable consequence of the process of the takeover of an entire industry by outside executives who infected it with an alien culture based on targets and bonuses.

Retailers who would be in their natural element flogging tinned goods in supermarkets were set loose to bully banking staff and foist unneeded and often worthless financial products on customers whose own needs were subjugated to the commission-at-all-costs culture.

It was, of course, a by-product of the global drive to attain the ever-increasing growth in revenues and profits needed to fulfil the fever dream of continuous economic expansion.

That dream – in reality a nightmare – is exacting a terrible price on people, whether they be stressed out bank employees in Britain or workers in the sweat shop garment factories of Bangladesh.

It was also a symptom of the disease that I saw developing years ago and which led me to convert The Whitehall Partnership from a commission business to one based on a transparent fees system years before the Retail Distribution Act made it compulsory for all financial services providers.

More than ever before I believe that the needs of our clients are paramount.  Which is why we make the effort to get to know them, understand their current financial position and their future needs, while optimising tax efficiency, controlling investment risk and steering them away from the high investment fees that would otherwise leave them out of pocket.

Whether you are a victim of bank mis-selling or not, it makes sense to talk to a qualified and truly independent financial adviser such as ourselves.

To arrange a free initial consultation that will not obligate you to anything call The Whitehall Partnership today on 0845 43 49 250.

 

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