Banks need “change of culture” to win back customer trust

Banks could need a culture change to win back trust

Banks need to publish more information about conduct and work culture, and less about their hard financials.

That’s according to Andy Griffiths, executive director of the Investor Forum, who reckons that more detailed insider info is the way to win back public trust. The Investor Forum is an institutional investor association which represents 35 of the largest investors in the UK. The group includes membership from BlackRock, Capital Group and Fidelity international.

“We want to encourage investors to ask more questions on these non-financial issues, like what do customers think about what banks are doing,” Griffiths told the Financial Times. Banks, he said, should give more information around those sorts of issues.

Banks in the UK have had their reputations tarnished by misconduct scandals and regulatory oversights. More than $50 billion in fines has been issued at a time when institutions should be trying to win back customer trust.

Power shift

A pair of reports from Banking Futures, seen by the FT, align with Griffith’s views. Both examine how banks can “better contribute to the real economy” and how communication can be improved between investors and stakeholders.”

One report calls for the creation of an “annual report on customer outcomes”. Banks, it says, should increase their disclosure of how many unvested bonuses they gain from misconduct and how many investigations they undertake.

The reports also recommend the establishment of a new Financial Arbitration Service. Its role will be to “redress the balance of power” between lenders and small businesses.

More on the way

Banks could be facing even more fines from the regulators. Only 47% of UK FIs have started preparing for the new General Data Protection Regulation (GDPR). The regulation comes into force on 25 May 2018.

This reluctance to get underway is troubling, since 12% of firms admitted in the same YouGov survey that the maximum fine for noncompliance would put them out of business.

On the protection side of things, just 36% of FS firms said they were certain they could detect a data breach within their organisation. 41% said they were confident they would notify the relevant stakeholders within the required timescale of three days.

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