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Paul Penrose

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Paul Penrose - Finextra

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Naming and shaming the banks

10 July 2009  |  2948 views  |  3

The UK's Financial Services Authority (FSA) has published proposals that for the first time will 'name and shame' banks with a poor record for handling customer complaints. The proposals would see firms publishing their own complaints data every six months and the watchdog would publish results from the whole sector twice a year.

Introducing the policy, Dan Waters, the FSA’s director of retail policy and conduct risk, says: "Publishing this information will incentivise firms to deal more effectively with complaints and help to raise industry standards in this important area.  It is essential that the information is meaningful and genuinely brings benefits by enhancing customers’ experiences of the firms they deal with."

The banks have fought long and hard to keep these proposals at bay, for reasons best explained by this anonymous poster to a Times Online article:

"I work in complaints for one of the major high street banks. Its not a revenue creating area so staffing & resources are kept to a minimum, but with strict productivity targets. Hence rather than deal with a complaint effectively it is easier to refute the complaint and let it go to the Ombudsman."

For a customer-driven business, the banking industry sure has a warped view of the best way to handle customer relationships. No wonder the new Web 2.0 era of open social communications is treated with such suspicion.

TagsRetail banking

Comments: (3)

Bo Harald
Bo Harald - ZEF, Transmeri, Real Time Economy Program - Helsinki Region | 12 July, 2009, 07:11

Banks have themselves to blame for some of the complaints - having made "products" too complicated and having put sales targets ahead of real customer value.

But the problem with the above is that banks are hate objects in virtually any market situation - by media, by politicians (who follow media), by customers who do not get loans, by customers who did get loans, by customers who invested with the hope to get high yield without risk, by depositing customers who believe that the banks set the base rates so low, by customers who do not want to pay visibly for services, by consumer ombudsmen who resist transparent pricing etc etc

So the complaint stream reflects too much of the this sentiment and is difficult to be handled. Probably it is still best to make it public so that the man on the street can judge for himself if it is worth to spend his money for it. He pays every cent and penny for it himself - and this should in all circumstances be made very clear.

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Keith Richbell
Keith Richbell - eftpos Payments Australia Ltd. (ePAL) - Sydney | 13 July, 2009, 07:33

I personally think the root cause of the problem for banks is even simpler than the explanation offered by Bo. Banks have for too long separated Sales & Marketing from Customer Service. The former being viewed as "good expenditure", the latter being viewed as "bad" and to be eliminated wherever possible. As long as banks see service as an expense to be reduced by setting productivity targets, outsourcing customer contact centres to developing countries (as part of a perverse labour arbitrage strategy) customer service will suffer. More fool them. One day some enlightened bankers might wake up and realise "Sales and Service" are viewed as two sides of the same coin by customers. Successful businesses realised this decades ago, without having to rely on customer inertia, compliance and apathy.  

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Bo Harald
Bo Harald - ZEF, Transmeri, Real Time Economy Program - Helsinki Region | 15 July, 2009, 08:58

Keith makes a good point in "Banks have for too long separated Sales & Marketing from Customer Service." I fully agree - and this is what has led to blind product pushing - seriously complicating things instead of dearly - both by customers and staff - needed simplification.

But then customer service yesterday is not the same as customer service today. Having had the experience of launching e-banking for private customers in -82 the counterarguments were often that it will take away personal service. For what? For paying bills over the counter, for checking balances over the phone, for cashing checks (eliminated with transparent pricing in -83) for withdrawing cash etc. Most of this "personal service" was a 30-45 second encounter.. But in the country side there was/is still a social dimension by swapping the latest on children and grandchildren.

When most over the counter and call center services were priced transparently most of this disappeared. Customers had of course paid for the service before - without knowing it (paralell case now: enterprises charging for sending paper invoices..). When the cost is shown - customers know how to behave in their very own interest. The cost of banking in Finland was cut in half - and most of the savings given back to customers in fierce price competition. Will consumer organization ever realize this opportunity to really serve cost cutting for customers?

Today it is a question of delivering good services over the Internet. And good services means that contact centres are not loaded down with routine tasks or people not understanding the offerings (simplification, simplification, simplification..). In stead of investing in handling the symptons (investing in outsourcing work that should be eliminated) it should by now be very clear that the disease needs full attention - investments in eliminating complexity and adding many logical and more holistic layers in - the by now dominating - e-banking channel.

Then as Keith says: "Sales and Service" are viewed as two sides of the same coin by customers."

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