Last nights Panorama on BBC1 gave a wonderful insight into how banks view their customers. For many years the majority of the U.K. population have looked on banks and building societies as establishments that they can trust and people firmly believed that "their bank" would never mislead or abuse the trust they were automatically given. The onset of endowment miss selling, excessive bank charges, unethical mortgage lending and now the payment protection insurance scandal has meant banks are now the least trusted of all businesses in the U.K.
Should we be surprised at the actions of lenders? They are, until recently, owned by shareholders and all shareholders want to see a return on their investment. When a customer comes into a branch to discuss a loan/mortgage or investment, the advisor (think of them more as a salesperson than advisor) has targets to meet for payment protection insurance, mortgage add ons such as buildings and contents cover etc. If a person's income depends on them selling particular products to their customers are they likely to tell you anything to make you take the extra products? I would say almost definitely.
You will have seen on the programme sales techniques to sell insurances and investments. The offer of a free trial for p.p.i. and then the customer forgets it's there and continues to pay year after year. Investments being sold and the customer being told there is no chance of them losing their money. All lenders hold training courses on the selling of insurances and how to overcome customer objections. If the product is so good shouldn't it sell itself. Customers have been told they must take out an insurance to obtain the loan, they will get a better rate on the loan if they take out extra cover, self employed people have been sold insurances when they would never be covered by the loan. The list is endless.
" We have been telling people for many years not to trust their lenders. When you ask people what has your lender done to deserve your trust, the answer is invariably nothing! When you walk into a branch the bank is thinking, "How can we make money out of Mr Customer today." If your lender is trying to sell you something consider whether you really need the product and can you get cheaper or better cover elsewhere. Remember lenders are businesses like any other and they need to make money and you are how they make money!"
Commented Daryl Vickers, commercial director at Total Reclaim.
When you approach a lender for advise on finance or investments don't be afraid to shop around and don't take what they as gospel. Your trust should not be unconditional. Make them earn your trust!!!
