“UK banks will be seen facing two decades to clear up the ‘toxic culture’ that was decades in making and has cost more than US$60 billion in compensation and fines”, Cass Business School and Think Tank New City Agenda concluded in a joint study report.
According to the joint study report, from 2010 to 2014, banks were forced to compensate consumers by making provisions of at least US$42.51 billion for insurance products that were not sold properly. It has cost lenders US$6.4 billion for this mis-selling of prevaricated interest rates of products.
A Conservative Member of Parliament, David Davis, stated in the report that an aggressive sales culture having main interest in ripping off customers has cost dearly to the banks. He also said that this toxic culture that was decades in making will be taking years to change.
Some 20.8 million complaints have been received by British lenders since the financial crisis eruption in 2008, with the number of cases increasing from 75,000 to about 400,000 that are handled by the Financial Ombudsman, according to the report.
Banks have faced tougher regulatory scrutiny since the Government was forced to rescue Lloyds Banking Group Plc. and Royal Bank of Scotland Group Plc. when lenders faced demands ranging from extrication of customer operation from investment banks to higher capital buffers due to the financial crisis. It is going to take a long-term commitment to overcome these issues and transform the culture within the industry, Cass Business School said in its report.