Parliamentary Commission on Banking StandardsWritten evidence submitted by NGSU
Background to NGSU
NGSU is an independent trade union which has represented the staff of the Nationwide Building Society Group for over 40 years. The Union affiliated to the TUC in late 1999 and I have been a member of the TUC General Council since 2005. Currently our membership stands at around 12,000 members.
NGSU is a Staff Union and this distinction is an important one, particularly to our members. We share many of the same aims of the employer (NBS) and this can be best summarised as—a successful business = better terms and conditions of employment and higher pay = happy and engaged diverse workforce = dignity, respect and fairness for all (staff and customers).
As a result of this approach to employee relations, we engage with NBS Management on multi levels, both formally and informally, and this is a deliberate strategy on our part because we believe that we can achieve much more for our members in this way. This enables us to raise concerns which our members may have about any issue at the most appropriate level and to seek an early and appropriate resolution.
This is highlighted by my response to question 4 below. To answer the specific questions that you pose:
1. An account of any investigations into PPI selling NGSU has conducted
None carried out.
2. An account of any investigations into PPI product design NGSU has conducted
None carried out.
3. Any account from Nationwide staff members of their experiences in selling PPI
None. The issues raised by our members are about the pressure to achieve their sales targets—not specific products. I can say that “pushing staff to sell PPI” has never been an issue in Nationwide.
4. Any analysis NGSU has conducted on whether or not Nationwide’s incentive schemes for front-line staff caused mis-selling, whether PPI or other products
Our investigations into the operation of the incentive schemes leads us to believe that they do not lead to mis-selling but they have led to pressure to hit targets for referrals to the sales staff.
These staff are heavily monitored by NBS to ensure compliant selling which meets the needs of the customer who has been referred to them. This compliance monitoring is a mixture of case checks, mystery shopping exercises and requirements on Sales Managers to observe their sellers conducting the full sales process.
Where any individual issues of mis-selling have been identified these are dealt with swiftly and appropriately by NBS.
The first time that we saw the introduction of sales incentive schemes for branch and call centre staff was in 2008/2009 when these staff were lifted out of the overarching corporate bonus scheme and individual schemes were introduced. This period also saw the introduction of tighter targeting and bonus payments to the Senior Financial Consultants (sellers of regulated Investment and Protection products). At the same time NBS extended the mechanisms that were in place to ensure that any individual mis-selling would be quickly identified—case checks, mystery shopping etc.—and action taken to ensure that mis-selling was not tolerated.
I stated earlier that our investigations identified pressure being applied to hit sales referral targets. This manifested itself to the Union during the annual Performance Review process in the spring of 2009. We were contacted by a number of our members with similar stories of being marked down in their annual appraisal as they had not hit their target.
This was an inappropriate use of what was designed as a performance development tool. Unfortunately, we quickly uncovered a number of problems with the way that Managers across the Branch Network, in particular, were applying this tool and the resulting anxiety and stress about potential performance management hearings that this was causing our members.
Having collected a number of views, both informal and formal discussions took place between the Union and NBS over the early part of the summer of 2009 and these led to a number of new initiatives being rolled out over the next year or so to resolve the problems that had been identified, for example: the co-ordinated calibration of performance ratings across business areas; the roll out of further performance management training (including a more sharply defined root cause analysis tool and the introduction of customer service and behaviour assessments as part of the bonus schemes). Over the period 2010—2012, we have seen a significant improvement in the spread of performance ratings across the Branch Network which more accurately reflect the overall job performance of our members rather than being narrowly focussed on target achievement.
A successful conclusion for our members, brought about by utilising our informal and formal channels of engagement.
5. How NGSU became aware that PPI was being mis-sold by Nationwide
We are not sure that Nationwide did mis-sell PPI. We became aware that there was an issue with PPI sales across the Financial Services Industry as the various court cases unfolded. More specifically within NBS, it became obvious that an issue existed around two years ago when the level of claims being submitted to NBS escalated dramatically as a result of the activity of claims management companies.
The very low (comparatively) levels of provisions being made by Nationwide, would tend to support our belief regarding PPI sales.
6. What NGSU’s assessment of the root causes of Nationwide’s misselling is
Nationwide does not, in our view, encourage or create an environment of misselling. Undoubtedly, as elsewhere, there will be individuals (both sellers and managers) who are driven to behave inappropriately, but these seem to be few and far between in NBS. My reason for this belief is the very low numbers of mystery shop outcomes which identify mis-selling and the very low numbers of disciplinary hearings being carried out in respect of inappropriate sales activities.
Culture
Turning to your question regarding the culture within NBS, it is very clear that since the merger with the Portman Building Society and the economic crash of 2008, there has been much more focus by NBS on product sales, but these have been across an entire range and not focussed on any particular product area. As highlighted earlier, this focus gave rise to pressure on individuals to meet targets, an increase in the number of performance management related disciplinary hearings, localised examples of inappropriate management practices, and a rise in anxiety and stress for our members.
This has been on the back, however, of a desire to “meet the needs of the customer” not to simply sell, and this is the message that has consistently come from the Chief Executive.
I also mentioned earlier, the multi levels of engagement that takes place between the Union and NBS and within the both the branch network and the call centre, the Union’s representatives meet locally with senior management to identify and tackle the issues which are of concern to our members. These discussions over recent years have included many of the issues highlighted above.
It is also very clear that NBS has recognised that customer service is the way forward as a differentiator in the Financial Services environment. This has been apparent by the more recent introduction and integration of both service and behaviour elements into the individual bonus schemes and the introduction of a pure service related bonus scheme for ALL of the employees of NBS which has a tough set of sustained service and customer satisfaction criteria which must be achieved before payment can be made.
From our initial discussions with NBS following the publication of the Wheatley Report and the FSA Consultation paper on Incentive Schemes (published in September 2012) it is increasingly obvious that over the coming months the focus on service delivery rather than the sale of products will become sharper still.
I trust that this information is sufficient for your purposes and if Ican be of any further assistance please do hesitate to contact me.
27 December 2012