A new whistleblower has emerged from the rank and file of state-owned bank Lloyds to confirm widespread mis-selling of packaged bank accounts going back to 2012.
The bank mole says the tactics staff were encouraged to use were ‘shocking and monstrous’. He also says staff were ‘bullied and harassed’ and threatened with being ‘managed out of the business’ if they did not sell enough fee-charging accounts and other products.
These accusations of product mis-selling are the latest to dog the bank. Back in 2011, former employee Ian Taplin brought to light concerns about vulnerable customers in Maidenhead, Berkshire, being unfairly treated when buying insurance.
His campaigning won support from local MP and then Home Secretary Theresa May and he gave evidence to the Parliamentary Commission on Banking Standards.
Taplin has continued his campaign against the bank and says he was in contact with May, now Prime Minister, only months ago.
The latest whistleblower to come forward says customers should now review whether they were wrongly sold fee-based bank accounts. He says Lloyds is under pressure to refund those affected.
About nine million customers of all banks are thought to hold these accounts, which offer a range of ‘benefits’ – such as holiday or mobile phone insurance – and can cost up to £25 a month. Packaged accounts are still sold, but have been improved.
A letter circulated to Lloyds staff in March this year, seen by The Mail on Sunday, details how customers whose complaints have been accepted by the bank will receive letters informing them of a refund and that their account will change to a free alternative.
The letter also reveals that failings in previous years have led to the creation of a dedicated ‘packaged bank account mis-sale team’.
A culture that allowed mis-selling
Vulnerable people, including people who aren’t financially literate and those from Eastern Europe, were seen as easy prey as they didn’t know about UK banking, didn’t speak good English or wouldn’t know how to make a complaint. Some were told packaged accounts were good for building a credit score. It was shocking and monstrous.
‘Staff were bullied and harassed and threatened with being “managed out of the business”. They were obsessed with targets and profit.’
Employees were incentivised to sell packaged accounts, regardless of whether or not they were suitable. Doing so would push an adviser closer to sales targets – with packaged accounts earning them 170 points compared with 30 points for fee-free current accounts.
Those who did not reach their targets were put under a ‘performance review’.
The whistleblower adds: ‘Bearing in mind the difference in points, when an adviser is sitting in front of a customer, do you think they were more likely to sell a normal current account or a packaged account?’
He says those customers who later tried to cancel their accounts were dissuaded by staff because it would affect the adviser’s selling record.
This approach was eventually dropped by the bank, but many who were sold the accounts years ago still have them.
Lloyds says: ‘The accusations made by this individual are unfounded and refer to practices and processes no longer in place.
‘Lloyds Banking Group does not have sales targets. We believe that in the vast majority of cases, packaged bank accounts provide good value to customers. Where we receive customer complaints, we review each one on a case-by-case basis. There is no evidence that staff were harassed.’
The Wider Problem
In the year to March 2016, complaints about packaged accounts across the market more than doubled, with about 44,000 cases referred to independent arbiter the Financial Ombudsman Service.
In its annual report, released at the end of May, it states: ‘Some customers had been sold accounts that they didn’t want or need.
Some people couldn’t have used any of the account’s extras – or couldn’t use the extras they’d specifically opened it for.
In a few cases, people who hadn’t had a UK bank account before weren’t told that free account options were available.’
Thousands of people have had valid claims backed by the Ombudsman, with banks told to issue refunds. It is believed many more could still be paying for accounts they should never have been sold and banks have reportedly set aside up to £1 billion to compensate those who complain. Lloyds put aside £225 million last year.