Salz Review - Wall Street Journal

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83 Salz Review An Independent Review of Barclays’ Business Practices building revenue through effective competition and in avoiding some – though not all – of the mistakes that others made. 8.26 As we observe throughout this report, Barclays has not always been as open and clear as it could have been. Openness is a value which goes directly to the heart of relationships with all stakeholders, for example: providing clarity about product suitability and pricing for customers; resisting ambiguity and applying high standards of disclosure to shareholder communication; promoting cooperative and straightforward discourse with regulators; and encouraging staff to raise concerns with no need to fear the consequences. 8.27 It seemed to us that some of these cultural characteristics combined in an attitude which came to represent Barclays in the eyes of the external audience. This attitude may have been reinforced by the challenges of navigating the financial crisis. This may have caused Barclays to focus internally, and somewhat defensively, rather than listen fully to legitimate external views and respond to them. 8.28 The vast majority of Barclays’ employees want to act with integrity. They want to exhibit behaviours consistent with the standards the public would expect of it as a major financial institution. This was reflected in our many discussions with staff, customers and counterparties, by the e-mails to our Review website, as well as in Barclays' Employee Opinion Surveys and both ours and Barclays’ customer research. Many employees told us directly about their sadness, disbelief and anger with what has gone wrong in terms of the much publicised poor behaviours. Some spoke of their frustration with management for not listening to their concerns about the way culture was evolving. They also spoke of their determination to restore trust and rebuild an organisation in which they and their customers can feel proud. This is important, but will be achieved only if the Group, throughout all levels of leadership, consistently strengthens its efforts to define, embed and reinforce a sustainable culture suited to a modern, major financial institution. 8.29 We have been grateful for the willingness of many Barclays employees to help us with the Review. At the same time, we experienced directly some signs of the organisational reluctance to be open. For example, it was generally left to us to ask the right questions and identify the right documents. This seemed to be representative of an organisational defensiveness, where some more junior members of staff had been given limited authority to apply their own judgment. We suspected that the caution was perhaps a habit left over from ‘fighting’ to remain independent through a long crisis with many challenges, combined perhaps with a feeling that the bank was continually under attack: from virtually all sides on the quantum of pay and bonuses; from regulators (in the UK especially on stress tests but also on conduct issues); from customers claiming for alleged mis-selling; from shareholders on the clarity of its asset valuations and its pay arrangements; from the Government for not making sufficient credit available to small businesses; and from a media happy to report all of this on both its business and front pages. We hope that a clearer set of values, well discussed and understood, will help to develop a confidence in the exercise of judgment around these values and an attitude of openness based on this confidence.
Salz Review An Independent Review of Barclays’ Business Practices 84 8.30 We conclude that it would benefit the Group significantly to regain and rebuild its sense of purpose, to develop a clear understanding of the values needed to support employees in delivering on this purpose and to design the business practices that will ensure that these benefit customers, shareholders and ultimately society at large. Customer Complaints as a Window into Culture 8.31 The way banks deal with complaints and client feedback reflects their approach to customers and clients. It is one of the most powerful external manifestations of an organisation’s culture. Barclays’ track record has been poor, although it has recently instituted significant improvements. 147 Exhibit 4. Complaints and Feedback Management Organisations that care about clients listen carefully to feedback and handle complaints efficiently, effectively and openly. This requires a belief that complaints and feedback management matters, clear management commitment, dedicated resources and efficient processes. Barclays Group’s historical complaints record has been as bad as or worse than that of most other main UK banks in terms of the absolute numbers of ‘FSA-reportable’ complaints made against it. PPI complaints 148 contributed significantly to an overall 39% increase in the total number of complaints over the previous two years. However, aside from these complaints, Barclays Group’s ‘banking’ category 149 complaints record has in fact been improving. This amounts to a 55% reduction in banking category complaints per 1,000 accounts in the second half of 2012 compared to the first half of 2010. While the number of non-PPI complaints made against Barclays Group has fallen, some of our interviewees related that, historically, Barclays had a poor attitude towards complaints handling in some parts of the organisation. We consider that this is likely to reflect Barclays’ tendency to be challenging or defensive when dealing with outsiders, which we observed in this Review. We believe the causes underlying this are relevant to our Review of business practices. Customers said that Barclays acts slowly throughout the complaints handling process; that there are shortfalls and delays in identifying the most significant issues. Interviewees told us, and we observed more generally, that Barclays was not always quick to recognise recurring patterns and deal with them diligently. This is reflected in the high number of banking complaints that remain unresolved eight weeks after being raised, 150 as well as in the limited change in the top-20 complaints categories since 2008. 151 More importantly, we observed insufficient urgency and failure to reach 147 See Appendix C for further details. 148 And other “General Insurance and Pure Protection” category complaints, namely: critical illness, income protection, other general insurance and other pure protection complaints: http://www.fsa.gov.uk/static/pubs/complaints/firm-level-complaints-data-2012-h1.xls. 149 Banking category of complaints comprises complaints about credit cards, current accounts, savings (including cash ISAs) and other banking and unregulated loans, according to FSA H1 2012 firm-level complaints data: http://www.fsa.gov.uk/static/pubs/complaints/firm-level-complaints-data-2012-h1.xls. 150 9% in H1 2010, which improved over time but jumped to 29% in H2 2012: according to FSA complaints data, the same on Barclays’ website and Salz Review analysis. 151 Source: Barclays.
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Salz Review - April 2013
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Salz Review - Wall Street Journal

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