It has been a long hard slog for aggrieved Clydesdale Bank business customers but yesterday, at last, they heard the bank's most senior executive indicate that their complaints about the way they were sold certain loans were justified.
Clydesdale Bank chief executive David Thorburn told the Treasury Select Committee that staff sometimes did "overstep the mark" in selling complex loans to small and medium-sized enterprises (SMEs). It may not sound like a major admission, but it was an important public acknowledgment that some customers ended up with loan products they did not fully understand. That is potentially highly significant, since it could, and certainly should, make it easier for customers who suffered as a consequence of taking on loans with sky-high breakage costs to secure redress without having to undertake costly and lengthy legal action.
Criticism of the Clydesdale has centred on complex loan products sold to small businesses. Many fell outwith the scope of the Financial Conduct Authority's (FCA) review of business loans but many customers and campaign groups believe the sale of the loans by the Clydesdale still needs to be independently investigated.
Mr Thorburn admits that staff sometimes went too far in selling loans to small businesses, but it is not fair to blame individuals for this because they were only responding to the culture they found themselves working within.
The Clydesdale sold these products at a time of expansion and were focusing on them because they were deemed to be different from other products on the market.
This habit of banks spending much of their time and effort pushing products and chasing sales targets instead of concentrating on providing basic, reliable banking services was a culture found across the sector and started to recede only in the aftermath of the crash, amid numerous mis-selling scandals.
A push within a bank to sell financial products carries obvious dangers, since it could result in staff targeting people with inappropriate products that could ultimately be harmful for them. This sort of behaviour is, in part, what led to the banking crisis in the first place.
The Clydesdale is reviewing its past sales and insists the number of cases where customers were sold unsuitable products is very small, but trust in the bank among customers has been undermined. "They would say that, wouldn't they?" is likely to be the reaction of many and who can blame them? Even some whose complaints have been upheld by the Financial Ombudsman Service have still had no redress.
Affected customers understandably doubt the sincerity of the chief executive's remorse and do not trust the bank to recompense everyone who deserves it, and for that reason, the FCA, an independent arbiter, should review the sales of these products as a matter of priority. A belated apology from the bank to a committee of MPs, and an attempt to lower expectations about how many customers will receive redress, will not be enough to restore trust in the Clydesdale Bank.
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