Move on Up
By Laura Willoughby
In January 2011 Bob Diamond, then the CEO of Barclays Bank, declared that “the time for remorse is over” when it came to the role of the big banks in causing the global financial crisis. Diamond was unapologetic when accepting personal bonus payments that totalled almost £30 million that year, claiming that it was time for the debate to move on from high pay and “banker bashing”.
Barclays was later fined just under £600 million by regulators (including £290 million for rigging key Libor interest rates), and was also forced to set aside over £2.6 billion to compensate customers for mis-sold PPI and interest rate swap products. Diamond also lost his job as a result of his bank’s role in the financial crisis, and for his inability to accept any responsibility for it, despite being the most important person in the world’s most influential company.
Despite these ironies, Mr. Diamond seems to have got his wish; public discourse has moved on from “banker bashing”, and many seem to have tired of deconstructing the financial crisis, choosing instead to focus on the hesitant and insecure financial recovery. Media coverage has largely chosen to marginalise dissenting opinions, instead choosing to amplify voices that are adept at diverting blame away from The City.
Certainly the blame game has its limits, but the widespread and heartfelt anger over the excesses that led to the financial crisis were both legitimate and justified. Many businesses and households have been forced to bankruptcy or worse, whilst millions of ordinary taxpayers have been made to pay twice for a crisis they did not cause through bank bailouts and the resultant assault on social security. The UN estimates that globally over 100 million people were pushed back into poverty as a result of the financial crisis.
To their credit, Barclays has tried to move on from these episodes. They have employed a new Chief Executive, and have undertaken a rebranding process optimistically labelled “Project Transform”, which aims at rehabilitating the reputation of the bank after these debilitating scandals. As the old idiom goes, however, it is actions that speak louder than words.
Since the launch of Project Transform, Barclays has been embroiled in further scandal. The bank was fined £50 million for acting “recklessly” and with a lack of ”integrity” over Qatari fundraising deals, as well as being found guilty for overcharging interest against customers over the last five years (or, in other words, since the onset of the financial crisis).
According to a recent YouGov poll, more than 4 out of 5 bank customers said they would be deterred from using a financial organisation that behaved badly in a number of key areas. Of those polled, more than half said they would be deterred from using a bank that receives a high level of complaints, awards excessive pay packages, or was convicted of criminal behaviour.
Despite such concerns from the public, very little seems to have been done to assess or measure how much banks have really improved in these areas. For these reasons, Move Your Money decided to commission a Scorecard that ranks over 70 financial institutions on issues that consumers consider important across five categories. These categories are honesty, customer service, culture within the organisation, support of the real economy, and ethics. The research that underpins this Scorecard uses information that is freely available in the public domain, and the research itself has also been published publicly and in full.
The aim of this Scorecard was not simply to criticise bad banks, but to provide an independent and transparent facility that measures banks’ performances in areas that people find important. More than simply “banker bashing”, the Scorecard is designed to help people reward the business practices they agree with whilst punishing those that they don’t, by empowering consumers to move their money out of badly behaved banks and into better alternatives.
Another aim of the Scorecard was to facilitate a constructive dialogue about how to improve banking in the UK. Sadly, Barclays refused to make an appearance on ITV’s Daybreak programme when it learned that Move Your Money was also on the show. This was despite the fact that the bank lists “being open to challenges from others” as well as “being accountable for failures” as part of it’s attempts at “Integrity” under the Transform rebranding exercise.
Given that the bank earned only 4 out of 100 on the Move Your Money Scorecard, many would have expected Barclays to engage with the public on how it could improve its services. In the absence of such engagement, responsibility falls on consumers to force the changes that they want to see.
This can be achieved by switching who you bank with to an institution that adheres to your principles. After all, if the last five years have proven anything, it’s that change won’t come from Westminster or boardrooms in the City, but from ordinary people putting their foot down and saying “enough is enough”.
With recent regulatory changes making it quicker and easier to switch banks than ever before, now is the time to put your money where your mouth is and to bank on something better. Without such action, banks like Barclays will have no incentive to change the way they operate – and as a result, we will be equally culpable if we choose not to act.
Laura Willoughby is CEO of Move Your Money UK
02 October 2013
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