Barclays' hard-sell tactics: You're a 'conquest' not a customer! - May 2010

The cut-throat sales practices used by bank staff are exposed in an internal document leaked to Money Mail by a Barclays sales manager.

Customers are viewed as 'conquests', with each sale generating commission and points towards a bonus target. Other High Street banks offer similar incentive schemes which reward salesmen for flogging as many investments as possible.

Retired couple David and Sheila Morgan lost almost £200,000 when they were advised by a Barclays salesmen to switch their life savings into a risky stock market fund. On visiting their local Milton Keynes branch in July 2007, the couple were advised to invest £360,000 from the sale of several with-profits bonds into the Aviva Global Balanced Income fund. Having banked with Barclays for more than 50 years, they trusted the advice of the saleswoman - who earned thousands of pounds in upfront commission from the bank.  In December 2009 they discovered a £188,000 loss on their nest egg. They withdrew the money at the end of February and put it in a building society savings account. But the damage had been done. Barclays has made several offers of compensation, but even the best was some £60,000 short. Now - more than a year after discovering their loss - their case is still sitting with the disputes arbitrator the Financial Ombudsman Service.
Mrs Morgan, 67, says: 'These people are no more than salesmen who gave us the hard sell. This has dominated our lives for more than a year. We've had to put our lives on hold; we haven't been able to book any holidays. We - like many of the other victims - have banked with Barclays all our adult lives and this is how they repay us. It's shameful.'

The document shows that persuading a customer to gamble their savings in the stock market is 100 times more lucrative for salesmen than advising them to tuck their money away in a savings account.

A salesman will earn just 18p for each £1,000 saved by customers into a cash Isa, but will pocket £18.20 for each £1,000 invested in the stock market.

Those who manage to persuade a customer to sign up to Barclays Private Banking investment service earn £49.

Our whistleblower, who manages a large sales team at Barclays, says: 'It's a very high-pressure environment. The way we are paid means there is a lot of emphasis on getting people to invest more of their savings in the stock market than they should.'

He adds: 'Some of the things we sell - such as structured products - are rubbish. These are one of the most popular investments. It's an easy sell as they offer elements of protection. But we are now being discouraged from selling so much because we want to be seen to be giving proper advice.'

The document is particularly embarrassing for Barclays, which is believed to be under investigation by the City watchdog for persuading thousands of elderly customers to switch their savings into risky funds.

Salesmen also earn points which go towards bonus targets for their team. Barclays calls the number of points earned on a product its 'real retail Conquest Value'. Typically, the riskier the product, the higher the 'conquest value' and the more lucrative it is for the salesman.

Over the past year Barclays has cranked up the number of points it awards on some products in a bid to boost sales.

The number of points earned from every £100,000 invested via Barclays Financial Planning has jumped by more than a third - from 2,700 last year to 3,750; a Barclays loan earns 5,000 points.

The whistleblower says: 'The pressure can be unbearable. We are set unrealistic targets. They were increased in January and our rewards were reduced. This money comes out of customers' pockets one way or another - either directly, or through charges built into the product.'

Experts say the document makes a mockery of the City watchdog's decision to allow bank salesmen to escape its commission ban.

The ban, which will come into force in December 2012 as part of sweeping reforms, is meant to end the commission bias that leads to mis-selling, but it applies only to independent financial advisers.

Mark Gander, from the Consumer Action Group, says: 'So long as Barclays continues to view its customer base as potential conquests, it makes potential victims of them all. This points system encourages staff to mis-sell and get the highest return, regardless of the personal cost to their clients.'

Banks are the source of more than nine in ten complaints from disgruntled investors - many long- standing customers who have seen their loyalty betrayed.

Barclays responds: 'Our goal is to provide products appropriate to our customers' needs, and our investment range therefore offers a varying degree of risk and reward. Our sales process adheres to banking regulations and is designed to assess our customers' existing financial situation, appetite for risk and how experienced they are as investors. Our very strict standards require that we would only advise customers to invest in products that are suitable. Our staff are not incentivised to sell riskier, more expensive products. Furthermore, it benefits neither us nor our customers to sell products they do not need or want. Staff rewards are reflective of the complexity of the product and the time invested to fully address the customer's needs. "Conquest" is a long-standing generic term for new business. We don't use it in relation to individual customers.'

Source: Daily Mail - 12th May 2010

« Return to full news listings