The mis-selling of payment protection insurance (PPI) is costing banks hundreds of millions of pounds to put right and has spawned a new crop of claims management companies.
But what really went on inside the banks? More pertinently, to what extent did senior management pressure their 'advisers' to push the products on the public?
The Guardian has been in touch with one former NatWest employee, who has revealed all...
"After graduating I needed work and was recommended NatWest by a recruitment agent. I thought working in a branch would involve helping people with their money and might offer long-term career prospects. Initially I enjoyed it, but it became apparent the primary focus was to sell PPI.
"Each quarter the branch had to achieve a certain amount of sales points. We earned these through selling mortgages, packaged accounts, credit cards, referrals to the financial planning manager, and PPI. Large loans with PPI secured the most points.
"Our quarterly bonus depended on how many points the branch as a whole achieved. I recall that hitting 120% of target meant our bonus would be in a higher paying threshold. Working in a branch didn't pay very well, so the bonus really helped.
"In my role as a customer adviser I had to sell 10 loans a week with seven or eight having PPI - this was known as the penetration target. There was plenty of training in 'disturbance techniques', making the customer feel anxious about their ability to repay the loan in the event of accident, sickness, unemployment or death. Every morning we would meet with the manager to discuss how many loans with PPI and other products we would sell. If a customer refused to take PPI we had to explain to the manager the reasons given and which sales objections techniques we used.
"If after two weeks an adviser's PPI penetration was less than 70%, the regional manager would phone to ask why. Every day managers would receive calls to ask how many loans with PPI had been sold. The back office had a large whiteboard showing the number of loans and other products sold. When the area or regional manager was due to visit we felt under intense pressure to make sure we had sales written on it.
"One morning the area manager arrived unexpectedly and no sales had been made. She shouted 'this isn't good enough' and started to interrogate staff on their underperformance.
"If an adviser hadn't hit their target for the month they would be placed on a performance development plan. This could lead to dismissal if sales remained below target for a few months in a row. In practice, most underperforming advisers resigned or moved to non-sales roles. Many advisers had enough after a year or didn't pass probation, as the pressure was immense.
"I felt that the product wasn't suitable for most joint loan applications. We were told that personal loan protection, NatWest's name for PPI, would ensure a customer's loan repayments were paid in the event of accident, sickness, unemployment or death. I was under the impression it would pay out. But if the second applicant was unable to earn an income, it wouldn't cover them. This meant PPI was unsuitable for most customers taking out a joint loan. We had to highlight that only the first applicant was covered, yet we did it in such a way to make it look insignificant.
"We knew PPI was overly expensive, with some insurances costing £100 a month. There were plenty of other insurances on the market that could offer similar or more suitable cover at a much lower cost.
"There were many times I felt a loan was an unsuitable product and PPI was too expensive or didn't cover all the customers' needs. I remember selling a £25,000 loan with protection to one particular customer who earned about £18,000 a year. It was to consolidate all her credit cards. I felt she wasn't in control of her spending and could benefit from impartial debt advice. A few months later she came back saying she had started spending on her credit cards again. If I had given her honest advice I would have been disciplined. As far as banks were concerned the only good advice was further borrowing.
"I do believe people should take responsibility for their own financial decisions. Yet as a part of the decision-making process, banks should be giving prudent advice relevant to customer needs, not based on selling expensive products."
A spokesperson for NatWest said: "The new management of RBS stopped the selling of PPI products and have changed the way we reward branch staff by putting a much greater focus on customer service. We have also worked closely with the Financial Services Authority on the design and sale of new products to make sure the PPI situation is never repeated.
"We are now working hard to compensate customers who were mis-sold these products in the past. Our customers can complain to us directly for free and we would like to remind them that we treat complaints directly from them in exactly the same way as those coming from a claims management company."
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