Until the regulator toughens up its act, Santander's boss has little inducement to deliver good service
I've seen hardened hackettes melt in the presence of Ant�nio Horta-Os�rio, the handsome and charming boss of Santander, recently poached to run Lloyds Banking Group on an �8m-plus pay packet. But no amount of charm makes up for the alarming collapse in service standards that the bank's many customers have endured.
From 2007 onwards, Horta-Os�rio made promise after promise that tackling service issues was the bank's top priority. Yet, under his watch, the problems seemed to deepen. Yes, acute delays at the bank's probate division were dealt with, and, yes, during the financial crisis Santander absorbed Alliance & Leicester and Bradford & Bingley ? operational challenges that would dent any bank's service capability.
But they don't explain why, by the end of the first half of 2010, its official complaints tally was the worst in Britain ? and by a huge margin. Compare it with Nationwide, which, rather like Santander, is a business primarily involved in savings and mortgages. Santander's complaints were running at an extraordinary eight times the level of Nationwide's.
Was Santander really focused on service as its top priority? Or was culling jobs, cutting costs and increasing profits all that really mattered? Judged by those measures alone, Horta-Os�rio was a magnificent success.
His replacement is Ana Botin, the daughter of Emilio Botin, the Spanish bank's chairman. She has already told a Commons select committee the bank is working hard to improve customer service. But when her chief duty over the coming months will be to prepare a partial flotation of the UK business to raise as much as �4bn, one imagines that where the bank stands in a list of retail complaints isn't going to be top priority. And as the daughter of a billionaire, it's unlikely she's ever had to tear her hair out over a �1,000 Isa transfer that's gone wrong.
Bank chiefs are economically rational people. They spend their time meeting goals that will achieve for them the highest personal earnings. Share price, dividends, earnings per share and so on, all go into the mix by which their pay is determined. But not customer service, that somewhat amorphous, immeasurable concept.
However, the FSA does now have an accurate table through which it can rank banks according to the formal number of complaints. In an ideal world I'd like to see the worst-rated bank each half year be fined a trifling �1m ? but for that �1m to be deducted from total boardroom remuneration. The bosses then might make service a real priority. It won't happen, of course.
In Ireland, a country devastated by the actions of grasping bankers, amid a bailout that will leave its citizens in hock for a generation, bankers still went to court to demand bonus payouts. They know no shame.
Maybe a better course of action is for the FSA, or its successor, to use existing powers to bring banks into line. In the past, the regulator has demanded that pension and endowment companies halt the marketing of products and ordered salesforces to be retrained. Salesforces, numbering thousands of men and women, were "taken off the road". If a bank has measurable and persistent poor service, then why not take its salesforce off the road? In other words, ban the bank from selling savings or mortgage products for a period, say a month, while it gets its service in order. Maybe chief executives might then sit up and listen.
To be fair to Santander, its second-half 2010 complaints figures are markedly better. But they're still likely to be the worst of the lot. Ana Botin, your bank has great best-buy products. Now do something about service.
Source: http://www.guardian.co.uk/money/blog/2011/feb/26/customer-service-bank-executives-santander
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