Insight
Title:
Mis-selling and other scandals undermine customer trust
Description:
Recent scandals include:
- Equitable Life
- LIBOR fixing
- Split capital investment trusts
- Precipice bonds
- Keydata
- Arch Cru
Regulator fines include:
- Barclays, was fine £26m for gold-fix manipulation in May 2014
- Santander was fined £12.4 million for ‘serious failings’ in its advice arm
- HSBC was fined £10.5 million for mis-selling investment bonds to elderly clients
- Lloyds was fined £28 million over the incentives it offered to retail investment staff
Firms operating in the UK who've been fined for activities in other markets.
- 2016: Deutche Bank tentatively agreed to a deal involving £5.8bn over the sales of mortgage bonds just ahead of the financial crash.
I remember listening into a focus group in which participants were discussing which financial services brands they trusted. One participant remarked, "Well, I have heard of them, and I don't think it was for anything bad, so they're probably trustworthy" as if he was surprsed that there might have been any good news about a financial services brand.
This lack of trust will make it easier for new entrants with more innovative propositions to win market share from the encombents.
McKinsey 7S:
Shared values