Inside Smaug's Lair

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?

Don't have to make trains run on time, just build a shiny station

may contain sarcasm

Dole-drums. Job centres of the world I have known are numbered three. Liverpool. Chorley. Portacabin in Blackburn. I remember when these people could afford paper clips and Post-It notes. Gov. won't even give 'em scraps to write on now. Mate of mine did his whole BTEC in Media Studies signing on. Gave the same three jobs as evidence he was looking for work every two weeks for two years. Not like that now. You must spend at least 4 hours a day actively seeking work. You must take at least 20 steps per week to secure a job. Looks like you've joined Job Seekers Anonymous.

Still, at least the seating is in one piece. Not long since, I made a lot of money working for a bank. I was there two months before I found a chair without a chunk out of the seat. Screws and bare metal waiting to skewer my hand at every shift. Evening shift. Bottom of the pile. Runts get the worst of it everywhere.

I feel less dignified here, but not so morally bankrupt. It's good to be reminded of the other side. See how bad things are really. See who's doing well out it, who's doing ill.

Laurie Lee once said you can never appreciate what it is to feel full if you don't, on occasion, go hungry. After all, what is hot without cold, large without small, night without day? In most things there is balance, yet walking the streets around here and you see how far the balance has shifted. Some weeks I have gone days at a stretch on but one meal a day. I was in solid shape not so long ago, but I've been three months trying to secure housing benefit to reinforce my finances and am still waiting, held in bureaucratic limbo like some Kafka character, nothing but requests for further information and then the trail goes cold. One letter in three months and that chasing a response to another letter that failed to appear.

It's a brick wall of indifference folks, and if I struggle, how do other people cope? It's a baffling place to find yourself in and it can get quite hopeless. 

A cash grab, a grand heist got pulled in this country not so long ago. The richest got even richer and the people who started it all received an enormous bailout and went back to what they were doing, only with the added bonus of no longer having to share any of the wealth. Lenders were left to the mercy of the Pay Day, 1000% interest per annum mob.

To find out what happened to the remainder of society, spend an hour in a Job Centre. The drawbridge is raised, the watchtowers armed and the peasants left to the mercy of this harshest of winters. Please remember to check all crops with your nearest guard before expiring. And remember to keep repeating to yourself: We're all in this together. We are all in this together. We are all in this together. [dies]

And Another Thing... Banking As Usual

Hi. You don’t know me, but I am one of the 2.5 million people currently unemployed in this country. I suspect that my story is little different from most anyone’s, except that the government QUANGO I was employed at was shutdown, not for economic reasons, but because the Department of Health decided that a badly managed, three tier complaints system would be better handled by abolishing the middle tier. That’s another story for another time.

I have applied for some jobs, done some temping to make ends meet, but even that seemed to have dried up and so I needed to claim Jobseekers Allowance. Due to the high volume of new claimants, it was two weeks before I was called to interview, and two weeks beyond that before I heard that my claim had been successful. And in the interim the fun started.

I called my credit card company, Halifax, a few days before I was due to make a payment and explained the situation to the guy at the call centre. He was very nice, but very well trained, and informed me that as my case had not yet been sent to the Debt Recovery Department, there was nothing he could do to put my account on hold and avoid incurring charges for late payments. He did put a note on the system, but I would have to default and someone would be in touch.

Halifax, it should be said, is part of the Bank of Scotland, which is a subsidiary of the Lloyds Banking Group. The British government now holds a 43% stake in Lloyds, following its receipt of a slice of the £37 billion government bailout arranged at the end of last year. As better people than me have already stated, the government could have given that money to the banks’ customers to help with their debts, while still stimulating the economy. The net result to the banks would have been negligibly different than the one the government actually chose. Instead, they handed it straight over and the banks put it in their back pockets. Funny that there’s always enough money for invasions and for bailouts, but never enough to reduce the biggest gap between rich and poor in Western Europe.

So the next thing that happened was that I received five automated phone calls from the Halifax in two days. The first one I hung up on, assuming it was a scam. Yet no matter what I did to disconnect the call, each time I pressed for an outside line, there was the same electronic voice carrying on regardless, an unstoppable machine, like Arnie in Terminator. She even managed to somehow leave a voicemail message, which signed off, “We will call again later.” I’d half expected to hear, “I’ll be back.”

A couple of hours later and she was back and I was bored, so I decided to indulge her. I followed the instructions, which didn’t ask for anything too personal, a multiple choice question about my date of birth, and agreed to make a payment within fourteen days. No problem.

Two days later and she called three more times. Exactly the same damm phone call, making the same damm request for payment. If I was merely flabbergasted before, now I was simply annoyed with her damm cheek and the cheek of the Halifax and Lloyds in general. So I agreed to make a completely different payment, forlorn in the hope that my paradoxical payment promises might cause her head to melt.

Then, finally, a call from a human being. Another nice guy, who was genuinely helpful. I expressed my unhappiness at the use of their automated phone calls, explaining that while I may not feel intimidated, I am not elderly, or of reduced faculties, persons for whom these calls could seem sinister. Moreover, after a standard of acceptability is established, however sleight, this leaves the vulnerable open to future scammers. If one automated call is ok, why not them all?

Joel Bakan, in his book and movie, ‘The Corporation’, presents his thesis on why corporations are essentially sociopathic in nature, valuing profits and the interests of their stakeholders over the good of the planet and the people living on it. Society has a duty to protect the vulnerable and this is a highly anti-social method of communication, granted not to the extent of an oil spill, but it all adds up. The guy sympathised, telling me that they’d only been told they were starting automated calling two weeks before commencement (although I‘ve seen comments on forums from 2007 that make reference to them. I’ll give him the benefit of the doubt).

As I had had some money through in the meantime, I tried to make the necessary payment, at which point I discovered an even more irritating problem. The payment was declined and when I checked my account, I discovered that my overdraft hand been decreased by £260 with neither consultation nor information. Now, because I was a three year temp at my last job, I got paid weekly, had a lot of expenses at the time and was consequently never out of my overdraft. As I wasn’t making them enough profit, my bank, The Co-op, decided to start reducing my overdraft limit at the beginning of each month. I wouldn’t have minded so much if it hadn’t been the bank that sold me, with moderately aggressive insistence, a bigger overdraft increase than I’d wanted to take.

When I rang The Co-op I was informed that the six month agreement had come to an end, they don’t send out letters informing clients that this period is ending, and it is the customer’s responsibility to get in touch and renegotiate the terms of the agreement. This from the bank that writes to you every time someone scratches their arse at head office. I’d had three letters from them that week, all claiming to contain important information and every one of them a forest depleting dud.

Being unaware I was supposed to ring, they had made the reduction and charged me £40 in over-limit fees, for being three days overdrawn, although I did get half of this cancelled, as a ‘goodwill gesture’. Despite some arguing, it seems I was only entitled to £20 of goodwill. My overdraft was reinstated to its former glory, minus the £20 reduction. I was charged a further £20 in ‘administration fees’ for the privilege. Including the subscription fee I pay each month for the privilege of having an account (must be why they call it a Privilege Account), the Co-op made £104 from me in a little over a month. You can see now why they don’t notify the likes of me that our agreement is nearing its end.

A legal ruling last year declared that the Office of Fair Trading (OFT) had the power to cap the amount banks can charge their customers in over-limit fees and other ‘administration fees’. Eight banking groups had sought to censure the OFT’s powers through legal restriction. The OFT has stated that it believes that anything over £12 is excessive, but the appeals process is likely to drag on for some time. Despite this, most banks are now complying with the OFT’s directive. It may be an altruistic admission of defeat, or an attempt to induce amnesia, should they ultimately loose the legal battle. We will probably never know. The Co-op is one the few banks still persisting with excessive charging. What is it they know that Halifax, the Abbey and Natwest don’t?

This, as I tried to make the woman on the phone understand, is supposed to be, ‘The Ethical Bank’. What made me angry was that I hate advertising and yet I fell for that slogan. Maybe it would be more truthful to have the strap line, ‘The Co-op, more ethical than your average bank’. But then, when was advertising ever honest?

The Co-op girl was far from helpful. I have worked in call centres and have used what is known as the broken record technique many times (the technique by which you repeat the same thing over and over again to a tricky complainant until they get bored and go away), so maybe this was karma catching up with me. “Is there anything else I can help you with?” she said in that rising intonation that suggests you have succeeded in been helpful in the first place.

Look, I don’t wish to sound like I’m moaning, I am in relatively little debt, and while money may be tight for now, I am blessed with generous friends and family (Beggar that I am, I am even poor in thanks, but I thank you.). I am certainly a lot better off than many people in this country and in this world. What I am though is an aspiring writer and a student of life and wheresoever I find myself how can I not comment on the things which I observe? How can I not point out the absurdities I see in this increasingly topsy-turvy world?

The government made a very good show of calling the banks to task. Some practices that should have been illegal a long time ago have finally been outlawed, but ultimately the status quo has been preserved. It has been my observation that capitalism is the creative art of siphoning money to the rich from the poor, which I know makes me a wishy-washy, lefty-Liberal, but you know what? I’m ok with that. In a 'democracy', society is whatever we say it is. I offer the not too unreasonable suggestion that we should protect our vulnerable citizens from irresponsible practices like automated calls (literally, cold calling). Besides, we bailed out these people (our grandchildren will be paying for it) and yet I have not heard much in way of explanation of how this is all to be prevented from happening again. And after all that money, haven’t we purchased the right to at least speak to a human being whenever we like? I do most of my banking online, but when I want to speak to someone, when I proactively ring to try and come to an arrangement, shouldn’t I be able to speak to correct person, first time? Or am I just being unreasonable? You can tell me. I can take it.

I thought that if I wrote an article about my finances and how they relate to the global economy, some national paper might appreciate the irony and publish it for a small fee. After all, if I’m going to be paid for doing anything, it may as well be for something I’m good at and something I am passionate about. As for you, you can do something as well. Sign the online petitions listed below. If you bank with the Lloyds Banking Group, write to them to ask them to discontinue the practice of automated calling. You could also write to the Co-op, but then you would just be following my agenda. Whoever you bank with, write and ask them what measures they have taken to prevent another fiasco from happening, like the sub-prime mortgage meltdown. Change and progress are inevitable, yet they sometimes need a shove in the right direction. I am writing to my own banks and I shall ll let you know how I get on.
 
Letters

Halifax,
Customer Relations,
PO Box 548,
Leeds
LS1 1WU


Dear Sirs,

Ok, I admit it, the other Thursday I spent two hours in the bath reading the rather excellent book, ‘Leviathan; Or the Whale’, but was it really necessary to leave me five automated messages on my answer phone during that time? Was it then necessary to leave another five the following day? I know I owe you money, I know I was late making my credit card payment, but doesn’t ten calls in twenty four hours strike you as overkill? And yes, I am aware that I was late with my payment last month too, when you rang me three times in one day. However, on that occasion I agreed to make a payment within fourteen days, yet still you rang me three more times two days later. If I fail to make a payment this month can I expect fifteen calls?

I wouldn’t mind, but I did actually go to the trouble of proactively ringing you before my payment was due to explain that I had been made redundant and was waiting for a Jobseeker’s Allowance claim to be processed. I was fobbed off, told there was nothing you could (would) do to come to an arrangement and that I would have to default and then someone would be in touch.

Now correct me if I’m wrong but aren’t the Halifax part of the Bank of Scotland, which is a subsidiary of the Lloyds Banking Group? Doesn’t the British government now own a 43% stake in Lloyds, following it’s receipt of a slice of the £37 billion national bailout arranged at the end of last year? Funny that when you mismanaged your finances, the government stepped in to underwrite your incompetence. I owe you £60 and suddenly that warrants electronic harassment. Our children will be paying for your financial mismanagement, if not our grandchildren, the least you could of done was write off your customers debt for a month as a act of appeasement. Instead, as I have titled an article on this issue, it’s ‘Banking as Usual’.

Joel Bakan, in his book and movie, ‘The Corporation’, presents his thesis on why corporations are essentially sociopathic in nature, valuing profits and the interests of their stakeholders over the good of the planet and the people living on it. I strongly object to your use of electronic calls (literally cold calling), because of their intimidatory nature and the effect they will have on your more vulnerable customers. I have worked for a number of years in NHS complaints and I can only imagine what effect these calls have on the elderly or mentally ill. Moreover, how can you ensure that using this form of communication will not leave those vulnerable customers open to exploitation by scammers? I appreciate that you do not ask for any personal information beyond a date a birth, but by using this method of communication a level of acceptability is established. If one automated phone call is ok, then why not them all?

I am not only a Halifax customer, but a member of the public. I and everyone else in this country bankrolled the incompetence of the Lloyds Banking Group. Your customers have at the very least bought the right to speak to a human being when required and not to be harassed and harangued by some electronic harpy. I have started a campaign calling for this anti-social practice to be banned. Moreover, its introduction (which I am told by one of your employees was introduced with two week’s notice to staff) is further evidence to support Joel Bakan’s theory. Your organisation seems to have learned little, if anything, from last year’s financial crisis and I would like to know what procedures you have put in place to prevent such catastrophic meltdowns in the future. I consider myself to be fairly well read with regards to current affairs, yet I am still to be convinced that you have taken adequate steps to address this problem. Certainly when your staff do not know how to resolve problems that are presented to them, it is hardly surprising that we’re in this mess.

As well as the general issues I have raised, I would appreciate answers to the following specific questions:

• What is the rationale in using automated calling?
• What action has been taken to ensure that customers are not bombarded with automated calls and vulnerable customers are given adequate protection?
• How many automated calls are made to a customer before this triggers a call from a real employee?
• Is there an option to opt out of this practice?  What action will you be putting in place to ensure that customers in financial difficulty can inform the right department first time and agree a payment scheme?
• What measures has the Lloyds Banking Group put in place to ensure that the kind of financial mismanagement revealed last year (i.e. subprime lending and the buying of toxic assets) is avoided in future, which would, I assume, require further public investment?
• As a 43% stakeholder, how much of your day to day business does the government oversee?

I look forward to a timely response.