ASIC has recently penalised banks (again) for failures in their financial planning divisions.
This time it was for charging customers “advice fees”, which entitled the customers to annual reviews. However, no reviews were carried out.
Whatever happened to good old fashioned service? you might ask.
However, the requirements of a service business little financial planning is very different from banks’ other activities. Financial planning dictates regular communication, and timely face to face meetings. It is, to use the jargon, a “high touch” business.
Yet, face to face meetings are opposite of what banks have been encouraging now for decades. They want us to deal with them through the internet or, if we must, by telephone. In other words, an automated system, all very good for the banks’ expenses and their bottom line. No touch involved, or very light touch at most.
Add to this a strong sales culture amongst those staff who do come in contact with customers, and a reward system that encourages selling, and is it any wonder that there are problems.
And it’s not only in Australia. Recently Wells Fargo Bank in the USA was fined $185million after employees opened as many as 2 million accounts that customers did not authorise – all driven by pressure to meet sales goals.
The culture of an organisation involves the norms and standards that drive behaviour in an organisation. It is terribly important, for without the right culture, no amount of laws, regulations and supervision will succeed. It is also slow to change. I wonder if bank CEO’s understand it?
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