Salz Review - Wall Street Journal

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85 Salz Review An Independent Review of Barclays’ Business Practices resolution on issues specifically focused around helping customers. Barclays assessed their own progress in Treating Customers Fairly (TCF) 152 issues and a third of the TCF issues in the second quarter of 2012 had been live for over a year. Barclays is also seen to take a consistently over-defensive stance towards complaints. In the second half of 2012, 57% of Barclays complaints in total (77% of PPI complaints) referred to the Financial Ombudsman Service (FOS) were settled in favour of the customer. Between the first half of 2010 and 2012, the number of new Barclays’ cases reported to the FOS increased nearly fourfold. With an experienced leadership team focusing on the issues, it is clear that Barclays has recently given more attention to handling retail complaints: “… we believe complaints give us an opportunity to listen to and better understand the needs of our customers. We use this feedback to learn from the experience, continually improve our processes and prevent issues from reoccurring. We believe complaint handling is not just about principles and processes, but about resolving the root cause of customer concerns and stopping complaints from occurring in the first place.” 153 Other initiatives are also helping to reduce the number of complaints, including reinforcement of teams in charge of handling complaints, re-designing incentives to focus on customer satisfaction, regular ‘client care calls’ by management, better customer discussion documents and enhanced contact centre information tools. The challenge is to ensure that these statements and initiatives are fully applied in practice. Most corporate and institutional clients talked of the positive attitude of their dedicated relationship managers, whom they see as open to their complaints and effective in dealing with them. This is reinforced by new initiatives taking place within the corporate bank, including the implementation of quarterly compliance reviews to drive policy adherence as well as more analysis of (and learning from) root causes to identify, correct and prevent complaints. Recommendation 3: Customers In pursuit of its goal of being a leader among its peer institutions, Barclays should develop an understanding across its businesses of how to meet its customers’ needs and expectations while also meeting its own commercial objectives and those of its shareholders. It should seek to learn from customer feedback, and publish the measures by which it would judge performance in resolving complaints. Barclays should report periodically on progress against these measures by publishing the data both internally and externally so as to reinforce the seriousness Barclays places on continuous improvement. 152 TCF aims to help customers fully understand the features, benefits, risks and costs of the financial products they buy, as well as minimise the sale of unsuitable products by encouraging best practice before, during and after the sale. 153 Barclays Citizenship Strategy, UK complaints data: http://group.barclays.com/aboutbarclays/citizenship/uk-complaints-data.
Salz Review An Independent Review of Barclays’ Business Practices 86 Culture and Leadership by Business 8.32 There has been much speculation about the extent to which the investment bank dominated, and influenced the culture and behaviours of the retail bank. Our analysis concluded that, although there was some truth in this speculation, attempts to influence the retail bank were generally resisted. Decentralisation, the lack of mobility between the different businesses, as well as the launches of inconsistent values and cultural initiatives in each of the different businesses, led to a sense of cultural difference and cultural distance between the divisions rather than a sense of one culture with one clear sense of purpose and one set of values. Nevertheless, it does seem clear that some behaviours and values became increasingly common – commercial performance at the expense of a more balanced perspective perhaps being the most significant. 8.33 Although we did not find much evidence of the investment bank influencing the culture of the rest of the Group, we did find some examples: ― Between 2005 and 2011, internal movements into the Group Centre (Executive Committee and Group functions) predominantly comprised leaders from the investment bank and wealth management; ― Because these leaders had been with the Group longer than many senior leaders in the retail bank or Group functions, they typically seemed to have more influence in decision making at Group level; ― There was a programme of re-assigning clients from the Corporate Bank to the investment bank which (at least at the time) encouraged internal competition about ownership of clients. 8.34 In any group, the role models are important. At Barclays, the compensation system, promotions, and senior recruits all pointed in one direction. Financial contribution was paramount. In both the retail bank and the investment bank, the success stories were largely attached to strong personalities, successful sellers and revenue earners and individuals who demonstrated cleverness and an ability to win. We now turn to some of the individual business units. Barclays Capital, the Corporate Bank, and Wealth 8.35 The investment bank grew fast over a relatively short period of time (indeed, until 2001, Barclays’ Business Bank generated more revenue than the investment bank). The investment bank had a distinct, tightknit and consistent leadership team and operated as a relatively independent business within Barclays. We identified three (partly overlapping) phases with distinct characteristics: the ‘edgy underdog’ of the early years (1999-2003), with a narrowly focused business model; the rapid organic growth phase (2003 to 2007); and the financial crisis years (which included the 2008 acquisition of Lehman) to 2012 by which time it had become a leading global investment bank. In just over a decade, the weight of Barclays’ business model has moved from one based on relatively simple consumer products to one whose revenue depends increasingly on far more complex investment banking.
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Salz Review - April 2013
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