It may not rank with (https://static.independent.co.uk/s3fs-public/thumbnails/image/2015/06/09/22/headless.jpg) but the headline of this article in today's paper did catch my eye...
If winning our trust was easy, the banks would have done so
Clancy Yeates
It's no secret that public trust in banks is battered and bruised, but recent figures underlined just how hard it may be for banks to win back their reputations
Only one in three people trust the banking industry, according to figures from the industry's peak body this month.
There was a tiny improvement from 31 per cent six months ago to 32 per cent today, but the result is pretty stunning when you think these are businesses entrusted with our savings.
Granted, the same survey showed a higher 56 per cent of us trust our own bank, as opposed to banks in general. People mistrust plenty of other industries too (the media, for one) and the measures of bank customer satisfaction are quite a bit higher still.
But exactly why trust in big institutions has eroded is a topic for another day. The more pressing question for banks is: what might they do to win back their public reputations?
As the banks prepare to face a royal commission, this trust gap has been acknowledged by heavyweights from ANZ Bank chair David Gonski to Reserve Bank governor Philip Lowe, and banks have spent the last 18 months rolling out a six-point plan to try to mend things.
Obviously there are no simple ways to fix the banks' trust problem, because the industry would have done so if it were so easy. However, clues in what banks have done so far and action taken by banks overseas hint at further changes we might see.
First, expect to see more change in how people in finance are paid.
At the heart of so many problems in financial services of recent years have been the incentives offered to staff – whether they are financial advisers being paid commissions, tellers being given sales targets, or executives bonuses weighted towards the short-term.
There has been some progress in addressing this. Financial advisers have been banned from receiving commissions (except when selling life insurance). Banks have reined in or scrapped sales targets for tellers, and emphasised customer satisfaction instead.
But there's clearly more to be done. A report from the Australian Bankers' Association this month said it would take until 2020 for all banks to implement changes to remuneration structures recommended by a powerful review of incentives by former top public servant Stephen Sedgwick.
As just one example, there's likely to be a shake-up in the $2.4 billion a year in commissions paid by banks to mortgage brokers, to remove the incentive to write larger-than-necessary loans.
Banks may also face pressure to change how their top executives are paid (I wouldn't hold my breath for big cuts in how much). There has already been a shift towards bonuses that incorporate customer satisfaction, but further moves in this direction could make sense.
How else might banks win back trust? Perhaps by shifting towards simpler products that are less likely to trip up their customers.
A classic example is the ''teaser'' interest rates that are attractive for a limited amount of time, before reverting to a much worse deal for the customer, once they have signed up and are unlikely to leave.
In Britain, banks including Royal Bank of Scotland scrapped teaser rates for credit cards and deposit accounts in 2014. Chief executive Ross McEwan said at the time that zero per cent offers on cards could "trap people in debts they cannot afford,'' and this is a concern among consumer groups here, too.
Domestically, some local banks such ME Bank and ING have also moved away from ''teaser rates'' on savings accounts and there is a regulatory inquiry looking at zero per cent balance transfer deals. But across the industry, teaser deals are still widespread.
A third, related point is that banks could look at how they reward loyalty. The upshot of ''teaser'' rates on deposits, or big discounts for new mortgage customers, is that the best deals often go to customers who are prepared to shop around.
McEwan, floated as a potential next chief of the Commonwealth Bank, even said in 2014 he found it ''absolutely abhorrent that you would give a new customer a better deal than someone who has been with you for 30 years.'' Awkwardly for RBS, it is reportedly thinking about backflipping and some bringing teaser rates back in order to compete, but his point still holds.
Even though banks use these deals to win new business, discriminating between new and old customers sits uncomfortably with all that talk about putting customers first.
Banks have been rolling out a six-point plan to improve the industry's culture announced in 2016. This includes better handling of customer disputes, improved staff training, protection for whistleblowers, and weeding out bankers who break the rules. These are all worthwhile changes, but surely there is more to come.
With regard to teaser rates offered by banks, do they think we're all stupid? The answer to that is yes, and I think they're correct. It's interesting to note that at a time when our nation's scholastic performance has slipped further and further down the list of world best performers, the banks have been making hay!! :angel:
I am getting to the stage where I hate banks, especially "Which Bank".
Modernising as they go by removing 2/3rds of tellers and asking you to go to the hole in the wall.
Queues miles long, out the door and around the block. 47 minutes to get to the front and be told sorry, we are closing early because the system is not working and needs rebooting.
Poor interest rates whilst they charge enormous fees for a service that they don't or will not provide.
Banks, shoot the bloody lot of them.
The royal commission into the banks is in full swing. What can you say?
I think what "Gentleman" Jim Richards had to say to race fans after the 1992 Bathurst 1000 would be apt. [Google it if you don't know (https://www.google.com/search?client=firefox-b&ei=d-zYWs3GC4XF0gSCkLLYAg&q=jim+richards+pack+of+arseholes&oq=jim+richards+pack+of+arseholes&gs_l=psy-ab.3...3914.12918.0.13298.42.21.5.5.5.0.210.3026.0j14j2.16.0....0...1c.1.64.psy-ab..16.15.1372...0j0i67k1j0i22i30k1.0.FIPTNUlBZ1s).]
If people understood how our financial system worked, there would be riots in the streets
Once they finish with the banks then start on the petrol companies.
It is absolutely disgraceful what we are paying for a litre of petrol up here at the moment
If you have lost confidence with banks (not surprising) then it would be worth investigating Credit Unions (https://www.choice.com.au/money/banking/everyday-banking/articles/credit-unions-and-customer-owned-banks) for your banking needs.
I was on the board of a credit union for some years -the board is elected from members and the members are the owners. I am a big fan of this model for banking services.
No incentive to maximise profits for the shareholders. Any 'profits' are returned to the members as lower interest rates on loans and/or higher interest rates on deposits. So they are actually 'not for profit' organisations.
Credit unions are subject to Government regulations, like the banks, but, unlike the banks, they take compliance seriously.
When was the last time you heard of a credit union charging fees for service not delivered, advising not in the interest of the customer, selling insurance to someone who would never be eligible to make a claim?
Quote from: 'JeffH' pid='114993' dateline='1524516040'If you have lost confidence with banks (not surprising) then it would be worth investigating Credit Unions (https://www.choice.com.au/money/banking/everyday-banking/articles/credit-unions-and-customer-owned-banks) for your banking needs.
Also a huge fan.
I've pushed everyone I can into CUA, including a couple of organisations I'm involved in. Yes, its a little bit of work to set up correctly, but the following works well:
- Transaction account with card
- eSaver Rewards (requires $1,000/mth transfer into above from external sources)
- TWO eSaver Boosts ($250/mth in each, nothing out)
The above setup gets around 2.75% on the Boosts and 2.70% on the Reward (rates do change with the market though). I set up the automatic transfers to all happen on the 1st, and if funds are required, one of the Boosts is drained completely on the same day, with any excess going into the other. That way, no bonus interest is lost. Transfers are set up to come from the Rewards, since that has no withdrawal restrictions.
Plus, I have extra transaction accounts with cards for special purposes, such as online payments where there is a risk of unauthorised withdrawals. Just transfer in the exact amount, spend, and it now has a zero balance. You can have as many accounts as you want, and operate them as you please, all with no fees. :yahoo:
Well this one is not banking but it indicates that arrogance in customer dealings is not just in the banking sector.
Telstra fined $10 million after customers charged for 'premium' content they didn't sign up for (http://www.abc.net.au/news/2018-04-26/telstra-fined-$10-million-after-customers-charged-for-ringtones/9699246)
No doubt just another "procedural error". Strange that all such errors benefit the businesses to the detriment of the customers.
Where will it all end? [And, more importantly, when?]
Wait, there's more...
QuoteMr Sims said the ACCC was aware of other carriers offering similar services and had received complaints about Optus and Vodafone.
ABC news
And yet another one has come to my attention!
Ford slugged with record $10m fine for unconscionable conduct over faulty gearboxes (http://www.abc.net.au/news/2018-04-26/ford-hit-with-record-10-million-fine-for-unconscionable-conduct/9699474)
They tried to blame the customers.
A telco royal commission might just come up with some "interesting" findings as well. :dodgy:
Pedro
Today I received a carefully worded email from Angus Sullivan, Acting Group Executive Retail Banking Services, Commonwealth Bank of Australia to reassure me that media reports about nearly 20 million customer account records going missing -two years ago- "to reassure you there is no evidence of your information being compromised and you do not need to take any action".
That is not reassuring at all.
It would seem that there was, maybe, a problem and probably not really any big issue*. So what did the CBA do? That's right, hide it! That implies there was maybe something to hide; otherwise why not 'fess up and it would have just been a storm in a teacup (https://en.wikipedia.org/wiki/Storm_in_a_Teacup) and quickly forgotten.
Banking is supposed to be based on trust but it is obvious that some banks don't understand what that is. But they do know that "ethics" is a county in England.
Looking at what interest they pay on my savings and the account fees I am starting to think It might be prudent to just keep my savings under the mattress.
*I base that statement on media reports because what My Sullivan told me didn't really explain what may have happened; or may not have happened. The theory that the tapes "fell off the back of the truck" was taken seriously when the problem was investigated. That is a real indictment on the CBA security with customer records and borders on farcical.
A serious, scientific study has been confirmed by the Banking Royal Commission.
Bankers will lie at the toss of a coin
Economists at the University of Zurich, Michel Maréchal, Alain Cohn and Ernst Fehr, set out to learn whether bankers are in fact more likely to cheat. They particularly focused on whether people who consciously thought of themselves as bankers (and acted under this moniker) were more likely to cheat than when they had their non-professional hats on. They suspected it was something about the identity of being a banker that made people more likely to cheat.
To test this question, they asked a group of people working for a financial organisation to complete a simple questionnaire. The respondents were divided into two groups of 64. The first was initially asked a set of questions about their job as bankers (such as which division they worked in). The second was asked about their everyday life (such as how much television they watched). This primed the first group to think of themselves as "bankers"; the second as "everyday people".
After this step, both groups were then asked to play a simple game. They were asked to flip a coin ten times and record their results. Before they flipped the coin, they were also told if you got heads (for instance) you will receive US$20. Because it was an online test, no-one could check the results – so there was lots of room for lying.
The results were surprising.# The people who were primed to think about themselves as an everyday person did not lie about their results (despite the fact there was ample room to do so). But the group who were primed to think of themselves as bankers tended to lie significantly more – they misrepresented their results about 16% of the time and more than a quarter of the "bankers" group cheated.*
Much of this lying and cheating can be attributed to the small population of bankers who were quite happy to lie in almost every flip of the coin if it benefited them. But the study indicates that by simply prompting a person in the financial services industry to think about themselves as a banker means they are more likely to cheat.
#We now know this is not surprising after all.
*In fact 5 of the 64 "banker" group reported ten consecutive heads! Not just cheating but blatantly cheating it seems.
The same experiment with people from other occupations, students etc. did nor show any statistical variation between the two groups, suggesting that banking culture promotes a propensity to cheat. Of the data collected in the Swiss experiment, the most telling of all came from its survey of which sectors in society the general public believed would be most likely to cheat in the coin-tossing exercise. Banking topped the list, ahead of even prison inmates. Not that that would surprise us anymore.
Reference. Nature volume 516, pages 86–89 (04 December 2014) (https://www.nature.com/articles/nature13977) "Business culture and dishonesty in the banking industry" Alain Cohn (https://www.nature.com/articles/nature13977#auth-1), Ernst Fehr (https://www.nature.com/articles/nature13977#auth-2) & Michel André Maréchal (https://www.nature.com/articles/nature13977#auth-3)
Interesting stats Jeff ...... 10 heads in a row = 1064 to 1, so 1 person in 1064 should get it. (Over a long run). So 5 people of 64 .... hmmm, a small sample size, but still an interesting study.
I guess that just proves that statistically bankers are just more likely to be ........... #$%@heads.
"If winning our trust was easy, the banks would have done so"
This is an interesting idea....
I think the problem is not so much in gaining trust. As REgaining trust.
I now work in an industry which tends to not be well liked/trusted/respected. However, even coming from that outlook, it is generally not that hard for me to gain peoples respect and trust.
I just have to do the right thing, behave properly and do what I say.
Once you have blown peoples trust (as the banks have done) its a whole different matter.
Well I don't know what I was getting excited about. Since its inception six years ago over 1,100 bankers have taken the Banking and Finance Oath (http://www.thebfo.org/home).
"Trust is the foundation of my profession.
I will serve all interests in good faith.
I will compete with honour.
I will pursue my ends with ethical restraint.
I will help create a sustainable future.
I will help create a more just society.
I will speak out against wrongdoing and support others who do the same.
I will accept responsibility for my actions.
In these and all other matters;
My word is my bond."
The Vision
"A banking and finance industry that
meets the community's needs and has its full confidence thereby fulfilling its integral role in society."
Signatories include include the current chief executives of the big four banks, APRA chairman Wayne Byers and new Australian Securities and Investments Commission (ASIC) head James Shipton. Signatories pay $20 per year to affirm the oath.
So that's it. Everything is rosy after all.
Hang on....''We judge the success of the Oath not by the number of signatories but by the behaviour it encourages,'' Dr Laker said. Dr Laker is head of the Oath's board.
Hmmmm, not successful so far then.
(https://www.australian-coins.net/gallery/albums/userpics/10055/139/Robbery.jpg)