Bernard Ginns: Another blow to tattered reputation of financial services

Writing in the annual report for the year ending September 2009, Lynne Peacock, the chief executive of Clydesdale and Yorkshire Bank, said the lender is “supporting our customers in these challenging times”.

Households and businesses will have been reassured by her words. But a strongly worded release from the Financial Conduct Authority in the last few days puts Ms Peacock’s comments in a very different light. It fined the bank £8.9m “for failing to inform its customers clearly of their rights after the bank miscalculated the repayments on over 42,500 mortgages”.

The City watchdog said the lender discovered an error in April 2009 about how it had calculated mortgage repayments for customers with variable rate mortgages.

Some 22,000 accounts were left with shortfalls because customers made repayments that were insufficient to repay their mortgages by the end of the agreed terms, it added.

Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “For most people mortgage payments are their biggest monthly outgoing and we all budget on the assumption that the information our mortgage lender gives us about what we need to pay is correct.

“Here Clydesdale failed in that basic duty and, when it discovered the problem, sought to pass all of the consequences on to its customers – expecting them to find the money to remedy mistakes which were entirely of Clydesdale’s making.

“Firms must put the interests of customers at the heart of their business if we are to restore trust and confidence in financial services. Clydesdale is paying the price for its decision to put its bottom line ahead of the need to ensure its customers were treated fairly.”

The £1.65m-a-year Ms Peacock has since moved on, leaving her deputy David Thorburn, now CEO, to pick up the pieces.

He told the Yorkshire Post that the lender made “an error of judgement” in the way it handled the situation and apologised to customers.

Yorkshire Bank has spent a small fortune on a rebranding exercise, which features the tagline “We Care About Here”.

Given the many and varied scandals of recent years, only sustained actions will persuade a cynical public that financial services businesses have their best interests at heart.

My interview with Mark Carney, the Governor of the Bank of England caused a storm in the foreign exchange markets when it was published last Friday morning.

The pound spiked sharply against the dollar after the central banker told me he saw no need for more bond buying given the economic recovery.

But leaving aside Mr Carney’s comments about quantitative easing, the Governor revealed some information that should be of interest to all those working in Yorkshire’s financial services industry.

He said: “If you look at what is valued again in financial services, it is a focus on financial institutions that can make their own credit decisions, that aren’t run by algorithms or computers, that know their customers, that have areas of focus and speciality, that have boards that are actively involved and aware of concentration risk.”

These are virtues commonly associated with smaller lenders, like the building societies that Yorkshire is famous for.

Mr Carney also revealed that the Prudential Regulatory Authority, which supervises banks and building societies, has 20 applications for banking licenses, up from three a year ago, after the Bank eased entry to the sector.

He told me: “The point being that new institutions that have a regional focus, that know their customers and have that attitude are going to develop and we see some examples here.”

Industry commentators lament how difficult it has been to introduce more competition into the sector. The prospect of up to 20 new entrants, perhaps with regional profiles, could be just what the UK needs to stimulate a healthier banking market.

BT talks a good game, but its customer service is lacking, I have discovered in recent weeks.

A straightforward request for a BT Sport viewing card led to a frustrating and fruitless round of call centres and websites.

I flagged up my concerns to the regional press officer, who passed me on to something called the ‘CEO Executive Level Complaints’ department in Newcastle.

The complaint handler was very charming, but as yet there is still no joy with the BT Sport experience.

The PR assured me that the individuals I dealt with along the way had “feedback/coaching”. That seems unfair when the problem appears rather more systemic.