PPI has cost Lloyds £10 billion so far, yet its staff are under orders in high-street branches to sell loans, insurance and investments
Lloyds Bank The bank which has a history of ruthless selling practices of products like Payment Protection Insurance (PPI), but even though Lloyds has been previously fined for its sales practices it seems nothing has changed.
When you consider the PPI scandal has cost the bank a staggering £10billion so far it really does raise the question: what needs to happen before Lloyds learns? The whistleblower states that branches are under intense pressure to sell more investments, insurance policies and loans.
The UK’s biggest bank has ordered staff to meet increased sales targets or face losing their bonuses or even their job according to the whistleblower. These sales practices and bonus culture has led to one employee posting a message on the banks intranet demanding to know: ‘Will this bank never learn?’
The Daily Mail claims the whistleblower is a senior personal banking adviser at a North London branch of Lloyds, who has handed over internal documents to the paper showing the banks latest targets. The whistleblower says that staff fear for their jobs and the target driven culture which is still prominent at the bank is leading branch staff to mis-sell insurance and investments so they can hit their sales targets.
All this after Lloyds insisted it has eradicated the sales culture which caused so many of its 30million customers to be ripped off. Documents shown to the Daily Mail outline the points system and quarterly sales target which are linked to staff’s annual salary. An employee on £20,000 has to generate a minimum quarterly sales target of 1.91 times of their salary, equivalent to 38,200 points.
The bank also awards branch staff points if they recommend a customer sees the banks financial adviser who then goes on to sell a product to the customer. The worry is that the riskier or more expensive products attract the highest points which can only lead to future troubles. Take a branch selling a tax-free Isa. The bank employee will receive just 45 points compared to 500 for selling a life insurance product.
Lloyds says employees also have to satisfy a range of other criteria, such as providing good customer service, in order to win bonuses
A customer who is persuaded to book an appointment with an investment manager will reward the employee with 500 points. This means a £10,000 loan is worth 550 points encouraging the sale of higher loans which may not be in the interest of the customer. Compare a loan sale to an Isa which only generates a paltry 23 points and it does not take a rock-scientist to see a problem here. Other examples given include the sales of personal loans which will be worth 55 points per £1,000, whilst a mortgage sale will earn an employee 1,200 points.
“The bank pretends they don’t talk about sales but they do. Staff are being exploited by the bank and we are all under huge pressure.
One employee told the Daily Mail: ‘Is this really the way to motivate staff and prevent mis-selling? Surely when we are supposed to be needs-based selling, the pressure should stop.’
Another said: ‘And so it begins again, the pressure to sell to our customers, targets for internet banking, targets for Club Lloyds, will this bank never learn!!!!’
Conservative MP told the paper: “Lloyds’ staff could not absolve themselves from blame. Mark Garnier a member of the Treasury Select Committee said: ‘Frontline staff need to be exposed to sanctions for responding to flawed sales incentives.
“A defence of “I was only obeying my bonus incentive scheme” is simply unacceptable. Sales staff have a crucial role to play in upping standards at banks and they must all be held responsible for bad practice, not just their managers. It is difficult to give honest advice to customers. There is a clear incentive to lend as much to customers as possible. Most of us are not trying to get a bonus.”
A spokesperson for Lloyds said “Lloyds has ditched straightforward sales targets, and said annual bonuses are based on ‘balanced scorecards’, which gauge feedback from customers.
But it admitted that targets for staff were increased in March. It refused to reveal the size of the bonuses available to staff, but said they are based on a percentage of salary. A spokesman said: ‘Our key objective is to help our customers manage their money in the best possible way.
‘Our training, processes and measures are focused on providing excellent service to our valued customers. We conduct regular reviews to ensure that customer needs are being appropriately met, but encourage our colleagues to talk to us if they do have any concerns.’