If you want to appreciate why the global financial meltdown occurred,
go spend some time working for a bank. Then just observe. You'll soon see the
how and the why of it.
That was me. I'd temped and done contract work for years, mainly
in the public sector. That kind of work dried up since the recession, so I
moved house and went to process Payment Protection Insurance (PPI) claims for a
bank. One of the big ones. One of the ones that needed bailing out. Don't judge
me too harshly.
It will be remembered that the financial sector was in court,
arguing for years against having to repay mis-sold PPI policies. Once defeat had been accepted,
they were faced with an increasing backlog. Each complaint had to be dealt with
in a statutory amount of time and most banks agreed to pay out on every legitimate
claim they had already received up to that point, just to get them processed
and out the door.
What's curious is what happened next. After the backlog, the
bank started to retrain staff to review each claim received and rejected around
80% of new complaints. They achieved this extraordinary turnaround by looking
at the original loan agreement or credit card application filled in by the
customer at the time of sale. If PPI was included on that form, and that form was
signed by the customer, that's a legally binding contract and the applicant was
and is legally bound to whatever terms were included.
If no form can be found, the bank just decide that the
customer would have filled in a standard application form (one of Plato's
perfect forms) and then goes ahead and rejects the complaint on the same
grounds. Even the ghost of a signature is as good as consent and the banks can
and do reject applications on these grounds alone.
How so different to when I first went to work there. My team,
in the space of six months, were trained and retrained for half a dozen separate
roles, at least one of which we never actually did. Yet I began and ended my
banking career reviewing complaints and so I got to witness what a difference a
year made.
In the beginning, PPI claims were being reviewed and at that
time around 80% of complaints were upheld.
The reason for this is that when examined objectively, it's easy to find
evidence of mis-selling on the majority of PPI policies sold in the last couple
of decades.
The most obvious sign of guilt is a cross next to the box indicating
PPI is to be included, indicating the customer was told PPI payments were compulsory.
Most customers would simply follow what the adviser told them and tick and sign
the box. You'll also see applications where the yes box has been pre-populated before
the form was even printed, another sign of mis-selling.
All these sorts of complaints were at one time upheld and customers
were refunded the premiums they'd paid, interest added. It wouldn't matter if a
copy of the application form could not be located. So long as the complainant
had raised the appropriate complaint points, the bank would pay out. There is a
mantra within the bank that the customer must never be disadvantaged by the
complaints process. And in the beginning, that was certainly the case.
As I understand it, the Financial Services Authority (FSA) then
asked the bank why it was upholding so many complaints and offered guidance on what
types of cases it could reject, and on what grounds.
The FSA, supposedly the regulator of the financial sector, will
be abolished in April 2013, to be replaced by two new regulators. One, The
Prudential Regulation Authority, will be part of the Bank of England. The
other, the Financial Services Authority, will be headed by the former chairman
of Hong Kong's Securities and Futures Commission. That's what they mean when
they talk about independent regulation.
Indeed, working in the financial sector has given me a fresh
perspective on the term, 'political organisation'. Banks, like any large
corporation, have an image to maintain and are more often concerned with being
seen to do right than actually doing right. Any actual good that comes about from
their actions is usually incidental to the main aim, that of being seen to be
doing good. Being fair to customers became, being seen to be fair to customers.
So it was a very different experience to review a case the
second time around. Under these new rules, a signed application form, with PPI
included under 'Financial Information', was enough to reject the complaint.
Nevertheless, a farce had to be performed. Reasonable
efforts had to be made to contact the customer and ask what they remembered
about the sale. Often they remembered nothing. That was fatal. Frequently a
customer said they were told they had to have the PPI to get the loan/credit
card. What the customer did recall for the most part did not matter. Everything
else was secondary to that signature on the application form.
Yet most everyone working on the project knew that this was nonsense. Time
and again I heard former branch staff recalling how they were trained to tell customers that PPI was compulsory. There is no consideration of these historic
practices at the bank, merely an exercise in creative accounting. It's not
about what happened, but what can be reasonably defended under law. Not once did
a phone call made to a customer change my original decision. It only had to be
done to be seen to be done.
Observe and you'll see. Procedures written on the hoof and
then discarded the following day, u-turn upon u-turn. Unit times slashed, with the
number of tasks need to process each case increasing.
Or witness two different agencies working the project simultaneously so the bank can always threaten to cancel one or other contract at the first murmur
of descent.
Indeed, insinuations of one sort or another would bubble
up through management at least once a week. They might decide to slash
unit times, when there wasn't enough time as it was, or decide the evening
shift is no longer to be a short shift, but has to work the same hours as everyone
else, otherwise it's unfair to people who get to go home at a reasonable hour.
Any objection raised and the message came back, 'They don't
care. They'll do what they like, they don't care whether you like it or not'.
That's the central message I took away from my brief career in banking.
And they don't care either. Which is to say, they are
careless. One of my many roles was inputting statements to calculate how much
PPI had been paid on an upheld complaint. One day, a new version of the
software used to calculate the interest we owed the customer was released. Some
customers were suddenly getting five or six times as much as they were
receiving before, running into tens of thousands of pounds. When anyone tried
to raise this, we were told to just use the calculator until we heard
different. By the time anyone senior twigged that something might be up, I'd
already moved back to review.
Yet it's not about what you do or do not do, but what
is and isn't your responsibility. As long as no blame can be attached to you , it's fine,
that's the game that's played. It's all about risk. The general rule
is that if you notice someone has done something wrong and that person is not
part of your team, ignore it, it's not your problem. The only question team
leaders tend to ask is: "Can it be traced back to us? Then forget about
it."
The industry talks about being fair to customers, but my
impression is that the financial sector doesn't feel like its succeeding unless
its actively engaged in disenfranchising someone, whether they be its customers
or staff. This leads to the same corrosive behaviour in those contracted to the
bank. I've seen expense forms that would make a politician blush. Weekends and
evening shifts are best. Then you see people log in early and go do their
shopping. Or leave early and get their mate to log out later. Banking
positively draws this behaviour out of people.
I couldn't thrive in that world. Too pushy, too intransient,
too little staying the same for very long, making maintaining a flow all but impossible.
Also, a job in which you are required to ring
customers merely to actively disrespect what they tell you can't be good for
the soul.
The public sector can be a little dusty, but there's a good
system of support and every decision is checked before it leaves building. Finance
is more caviller than that, more wild west, little or no support provided, instead
concentrating on spreading the blame around. Everything then comes down to a
series of Quality Checked cases, reds and greens, like some kind of playground
game.
I called this article 'Inside Smaug's Lair' because like
the dragon in 'The Hobbit', the banks appear to me to be lying on a bed of gold
and precious stones, routinely venturing out in the night to unleash punitive justice
upon the villagers. It was the financial sector that mismanaged its affairs
concerning sub-prime lending, borrowed billions from the public purse, set off
a global meltdown from which western countries will take years to recover, if
they ever do. Yet the banks seem barely to be affected. There was a new batch
of contractors being trained at least once a month for so long as I worked there. Few
other sectors are recruiting in such numbers. The banks have externalised and
offloaded their mistakes on to the rest of the country and retreated into their
lair to admire their hoard. A billion pounds put aside to payout PPI mis-selling is the
cost of but one shiny gem.
All in all,
it's the kind of atmosphere that leads to people taking risks and making
mistakes. What's more, there's nothing at all to prevent what happened in 2008
happening all over again. It's only a matter of time.
I went home one Friday and never went back. I miss the
friends I made there, but I guess the whole experience has left me somewhat bitter.
But then, I was bitter before I even started. I live in this country too and I
see the damage that has been done.
We shouldn't despair, there are always things that can be
done. If you've had a PPI complaint rejected by a bank, make sure you refer your
case to the Financial Ombudsman's Service (FOS). Every time a case is referred
to the FOS, it costs the bank hundreds of pounds. The more cases that go to the
FOS, the more inclined they might be to revert to upholding cases.
If you have a complaint in progress or are thinking of
making a complaint, make sure you tell the bank that you were told that you had
to take PPI on this type of loan/credit card. The bank will probably
ignore this and reject your complaint on the basis of a signed application
form, but it will be recorded on your file when your case progresses to the
FOS.
If the PPI was sold to you after 2005, you might also tell
the bank that at the time of the sale, you were in full time employment and were
entitled to 6 months sickness benefit and 6 months redundancy benefit from your
employer. That might not be strictly true, but in the financial sector it's all
about what you can get away with. Do unto others as they would do to you.
Further than that though, if you're a customer of one of the
big banks, one of the ones involved in sub-prime mortgages, bailouts, PPI
mis-selling and Libor fixing, find a smaller bank with which to invest your
money. Retaining the services of the usual financial suspects is like remaining
with an abusive partner who has demonstrated no propensity for change. Get over
it and go out with someone else and help create a wider base on which to support
the economy.
After all, why should the financial sector be the only one
to miss out on this lovely recession we're all having?
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