Oral evidence: Treatment of Financial Services Consumers, HC 631Tuesday 18 November 2014
Oral evidence, 18 November 2014.
Witness
Nick Brookes, Chief Credit Officer, Wonga, gave evidence.
Chair
Thank you very much for coming to give evidence, Mr Brookes. I begin with a letter that came into my office just before the weekend, which said that you may be restricted in the evidence that you can give with respect to the letters sent by solicitors purporting to be independent who are in fact partners connected with Wonga. It said that this might restrict your ability to be full and frank on this issue. We have discussed this with the police and as a Committee, and we feel that while it may not be an important issue at this stage, it may become so, and it is certainly for your judgment, not ours, how you answer questions. With that in mind, one colleague does want to ask questions in this field. I will hand the questioning over to Stewart Hosie.
Stewart Hosie
Mr Brookes, how far are Wonga through implementing the consumer redress scheme they have to put in place for their unfair debt collection practices?
Nick Brookes
Let me just start by covering a couple of points. First, the letters that went out purporting to be from solicitors or debt collection agencies were wrong. That should not have happened. Similarly, as our recent announcement on affordability said, we were not adequately making sure that people could afford to repay the debt that they were making, and that was wrong as well. These are decisions which have impacts on real customers, and we deeply regret that that happened. I will personally apologise to all our customers for that. It is not something that we envisaged happening, and we are very sorry for that. The other thing I would say to our customers and to this Committee is that we are working very hard to fix those situations and make sure we put it right for those customers in terms of the redress for the letters and the affordability piece, which we are looking at as well.
Stewart Hosie
So how far through the process are you in terms of real compensation and redress to your customers?
Nick Brookes
At the moment, we have sent out just in excess of 27,000 letters. Originally, 45,000 customers were impacted. We have had responses from around 5,000 customers. We need an active response from those customers; they have to accept the offer that has gone out to them. So far, around 99% of the customers who have responded have accepted that offer.
Stewart Hosie
That is a very high number. Are you surprised that so many—99%—have said, “Yes, we will accept this”?
Nick Brookes
We are not surprised by the acceptance rate. We are working through ensuring that we communicate with each of those customers. We still have some way to go to make sure that we send out all the other letters to customers offering that compensation. Those who are responding, as I said, are responding positively; 99% of them are accepting, and only a very small percentage want to have it looked at independently, case by case.
Stewart Hosie
You say that 43,000 customers were affected and 27,000 have been contacted so far. How easy was it for Wonga to identify detriment, loss or damage among your customer base?
Nick Brookes
This is something which occurred many years ago. It happened in 2008 to 2010, and it was stopped at the end of 2010, so we had to go back a substantial way to identify those customers and then contact them. Quite often their details may have changed. A lot of our applications are online and it has been challenging to ensure that we are able to reach, identify and contact those customers to make the offer to them. That is why we are about 60% of the way through that.
Stewart Hosie
In previous financial mis-selling episodes, the number of customers affected seems to have grown exponentially. Are you convinced that the 43,000 is the sum total or is it likely to creep up over time?
Nick Brookes
No, that’s the figure. We have been working with a skilled person in relation to this activity. That is somebody who is appointed jointly with the FCA to oversee the process we are going through. We have been going through that process and keeping them informed of how that has progressed. They review and agree all the details that we are sending out, as well as the methodology we have used, both from an identification perspective as well as ensuring that we are carrying out the right action for those customers.
Stewart Hosie
Finally, you are very new to the company; you arrived very recently.
Nick Brookes
Yes.
Stewart Hosie
So it is slightly unfair to probe too deeply with you on some of the historical stuff. How do you ensure going forward that you do not end up back in a similar place with similar flaws causing similar distress and damage? What should you or the company now do to ensure that cannot happen?
Nick Brookes
The company is making a lot of changes to the organisation. We are at a crossroads both for the company and the industry. We recently had a chairman appointed who has come out with a number of priorities for how we should look at our business. From a cultural perspective, we are looking to focus far more on the customer and ensure we are doing the right thing for the customer. There is a big programme of change going on in Wonga at the moment, as part of the priorities set out by the chairman when he joined in July.
Stewart Hosie
Can you give us an example of what you mean by that?
Nick Brookes
There are a great number of things. As soon as the chairman joined he immediately said that he would take the puppets off air and our advertising was under review. That was done that day in the UK. We also went completely off air in the UK; no TV advertising took place at that time. We have recently announced, again in the marketing area, that we are having the Wonga logos and the branding removed from the children’s replica shirts at Newcastle United. So we have made a number of changes there in terms of marketing. Matters were raised, we took note, reviewed them and made changes. Other things include changing the perception of how fair the product is. A good example would be if a customer gets into difficulty, we will immediately set up a repayment arrangement with them. That stops all interest and charges; there are no further fees added to that. They can set that up before the payment is due. In terms of customers getting into a spiral of continuing debt, we can stop that immediately. Even if a customer does not contact us, we give them a grace period of three days. If your payment is due on Monday, we will attempt to take that payment on a Monday. If it is not made, we will contact you and let you know that it has not been taken. You will get Tuesday and Wednesday and it will not be until Thursday that any further fees are added. That is pretty unique and quite favourable when you look at it in comparison with credit cards, where those things are normally added the same day. We have made a number of changes in how the product works to ensure it works better for the customer. If the customer still does not contact us—and we will make further contact—we will charge interest for only 30 days. The maximum it can go to is 30 days, which we think is fair. We are always trying to create a product that is fair to the customer, and those are just some of the changes that have been made. There are also a lot of changes of people. As you mentioned, I recently joined the organisation and have been there about two months now. I have got 20 years of history working in banking and financial services, particularly in the credit risk area. I am part of a new group of people there to reform it and ensure that Wonga is focusing on the right aspects as we move forward as a business.
Stewart Hosie
That is quite helpful. I am sure other people will probe what you are saying. It is useful for me to understand the changes that have been made in the context of this lending sector. We have got to remember what we are talking about, the payday side of it. It is useful to hear that at this point and I am sure you will be probed further on that.
Chair
Did you agree with the summary of the FCA regulation, which met a good deal of consensus, that it had pitched its work in the right place?
Nick Brookes
It is a difficult one to judge at this point in time. We were involved in the consultation process with the FCA. We agree with it being a regulated market that works in the best interests of consumers. The challenge is in understanding what happens to all of those consumers within that market.
Chair
What about these consumers who were taking loans who are no longer obtaining loans? Have you done any work on that?
Nick Brookes
Yes, and that is one of the areas which we need to focus on. I understand that there is a review in 2017, and I would agree with the previous people that it should be done sooner than that because we want to make sure that not only is it working in line for those people who can still obtain credit but also for those people who are no longer able to obtain it. I look at information on a weekly basis to do with people whom we are no longer lending to. We have a lot of people who interact with us via Facebook or make specific complaints. Many of our complaints at the moment are from people who are unable to obtain a loan and were able to do so in the past. I have to review a number of those on a weekly basis. There are some very serious cases as well where people are very distressed about the fact that they do not feel that they can bridge that particular payment because of the action that we have taken and the fact that we are no longer lending in certain areas.
Chair
Have Wonga taken people away from illegal, unregulated lenders and put them into regulated lending and are those at risk of going back to that route as a consequence of the regulation?
Nick Brookes
I would say that there is a definite balance there.
Chair
Is that a yes or a no?
Nick Brookes
That is a yes. I think we offer a valid service which is used by customers. Most of our customers have access to other credit as well. Clearly all our customers have bank accounts. That is one of the criteria that we have.
Chair
On what scale is this going to happen?
Nick Brookes
In terms of pushing people back the other way?
Chair
Yes.
Nick Brookes
If you look at the FCA report, they have put out certain figures that they think are appropriate. I think there is other commentary that would say something different. From what I have seen over the last couple of months and some of the changes that we have made, there is a large volume of customers that we are no longer lending to. Whether those customers go to another payday lender, or use another form of credit, or go to an unregulated sector, we don’t know at this point in time. We are looking to do some work which will identify whether those people went to a different lender once we can see some of that data mature. At this point, it is difficult to say, but from the information that I do see—comments directly from customers and complaints—it is definitely a difficult period of time for a lot of those customers in terms of making that adjustment.
Chair
If that is your view I am surprised by the equanimity with which you have taken the evidence which is collected on the FCA’s initiative, where you feel it is probably pitched in the right place, or certainly worth a try. Whereas what you are saying would suggest, would it not, that it hasn’t been pitched at the right place?
Nick Brookes
I think it is too early to say. We need to see the results of that. My concern is that it pushes a proportion of people into a different kind of unregulated market. There needs to be a balance between improving the outcomes for a number of people who are still able to obtain that credit versus the outcome for those people who are no longer able to. We heard some evidence before about the percentages and it looks like it is in the right place on balance; that is where I think the difficulty lies.
Chair
The evidence you have just given will no doubt be robustly challenged and the extent to which you are able to sustain it will be extremely important in the coming debate about how to structure regulation in this area.
Mr Love
I want to come to a mixture of conduct and culture. I will follow on from Stewart Hosie’s question about the £2.6 million compensation for the threatening letters from fake solicitors. Who was the person responsible for that policy and is he still with the company?
Nick Brookes
In terms of who the person responsible was, I joined the company two months ago and this was stopped over four years ago. In terms of anybody associated with it, there has been a lot of change at the organisation. My understanding is that nobody who was associated with those decisions is with the business any longer.
Mr Love
Last year, the Business, Innovation and Skills Committee carried out an inquiry into payday lending, and Henry Raine, who was your head of regulatory and public affairs, said: “We aim to lend to people who can pay us back. We do everything we can to lessen the load of bad debt.” A few months later, you wrote off debts for 375,000 people. He misled Parliament. Is he still with the company? If so, what role does he play?
Nick Brookes
I think Henry gave that information in good faith at that point in time. Some of the challenges in the organisation—
Mr Love
Do you expect the Committee to accept that? One in five of your borrowers were victims of your policies, and you say that Henry Raine genuinely believed that you were being honourable.
Nick Brookes
I think Henry provided that information in good faith. When I joined the company, one of the first things I looked at was affordability. It was something that the chairman identified as an issue, and something that the FCA asked us about a number of times. I looked at it, having spent 20 years working within banking and financial services—all that time I was in credit risk—and it was apparent to me that we did not have robust enough checks in place, so we made those changes.
Mr Love
Can you confirm that Henry Raine is still with the company?
Nick Brookes
He is, yes.
Mr Love
The Member of Parliament for Walthamstow, who was a leading advocate for the cap on payday lending that has been introduced, suffered a considerable number of abusive messages on Twitter, and somebody messed around with her Wikipedia entry. Both those things were traced to Wonga. Do you know who was responsible, and has action been taken?
Nick Brookes
Again, that is completely unacceptable. I don’t know who was responsible for it. Again, it was long before I joined the organisation, but I would not defend it in any way. It is completely unacceptable.
Mr Love
Can you confirm that the person responsible is now special assistant to the chairman?
Nick Brookes
I don’t have that detail, I’m afraid. As I say, I have been with the company for only two months, and I understand that that happened some time ago, but it is completely unacceptable behaviour.
Chair
It sounds like something you need to check out.
Nick Brookes
It is something that I will look into. If you want me to respond and write to the Committee, I will certainly do so.
Mr Love
It appears that the people who were responsible for all the problems at Wonga are still with Wonga. How do you intend to change the culture of the organisation?
Nick Brookes
We have a lot of new people who are joining the organisation. The chairman joined the organisation in July and set out a number of priorities which, as I said earlier, we are pushing forward quickly. They include the marketing and the products. Other people, such as me, have joined the organisation. We have a new group CFO who will join the organisation in December and a new UK MD. We are all focused on ensuring that we reform and change the organisation for the better so it is more focused on the outcome for the customer. We want to ensure we have a sustainable business and sustainable products.
Mr Love
We will be able to trace that ourselves. I look forward to seeing significant changes to the way Wonga does its business. On 2 October, you put in place interim lending criteria. Can you tell us when you expect them to become permanent, and can you explain the approach that you are likely to take with them?
Nick Brookes
On 2 September, we put in place the new affordability measures. We discussed them with the FCA and took it through the approach we are applying, in terms of how we assess affordability. We also started a process of investing in some additional technology within the organisation and a new decision engine, to which we will apply new criteria. We are working with the FCA. I mentioned that there is a skilled person, in terms of the remediation of the letters. We also have somebody who will review those criteria to ensure that they are appropriate and that the loans are affordable to the population we are lending to.
Mr Love
In the previous session, we discussed the people who, although they had been dealt the hand of inadequate affordability assessments, for whatever reason managed to repay their loan to Wonga. You got off lightly with the voluntary agreement between you and the FCA. Are you going to make things right and pay compensation to all the Wonga customers affected by inadequate affordability assessments?
Nick Brookes
We took a very broad view of affordability. When we came up with the criteria and agreed them, it was quite a conservative set of new ways of looking at affordability. We then took that new understanding of how we would lend to people and we overlaid that on all of the existing population we had; all the customers we had who were up to date, all the arrears customers and the customers who had been on the books for a substantial period of time. Some of them had taken loans that were made seven years ago. We went back and applied those criteria to loans made a very long time ago, when some of the data and systems would not even have existed, and even the legislation was not in place. So we went through an extensive process of assessing which loans were unaffordable—
Mr Love
The point I am trying to make is that the people who were compensated were those who were in arrears of up to 29 days and over 30 days. There were some people who rose to the occasion and paid back the debt, even though they could not afford it. Many of them would have taken out further loans, probably with other payday lenders, and perhaps even gone into the informal—illegal—sector to do so. When will they receive compensation?
Nick Brookes
We reviewed all the portfolio we had and our discussions with the FCA focused on—
Mr Love
You’re expecting us to accept that Wonga is a changed organisation. Here is the perfect way in which you can show the change in the way that you are providing responsible lending, by compensating those who suffered from irresponsible lending.
Nick Brookes
We have done that, as you mentioned, with 375,000 customers; we have followed through on the actions we talked about on 2 October; and we have remediated the vast majority of those. We have written off the bulk of all those loans that we referred to—the 330,000—and for the 45,000 who we were refunding or returning interest and fees to, we have managed that for the vast majority of those, as well as correcting their credit files and everything else of that nature that we agreed to.
Chair
Andy Love has made a number of specific allegations there, which I think it would be important for you to come back to the Committee on in writing, with respect to some very concerning aspects of behaviour internally at Wonga. There appears to be a lot more work to do, and it would be helpful if you could confirm that, in order to sort out the culture of Wonga.
Nick Brookes
There’s a lot more to do. We are not there yet, but we are making large strides. I have gone through some of the pieces, in terms of new people in the business; the way we have looked at our marketing; and the way we have looked at our fairness, in terms of the treatment of customers and some of the pricing pieces there. So we are making significant headway in relation to reform—
Chair
I am sure you understand the Committee’s concern. We have been listening for years to bankers of various types coming before us and telling us, “Don’t worry. We did have a serious problem, but we’re on top of it now and we’ve all but sorted it out.”
John Mann
What’s the name of the skilled person you have appointed in conjunction with the FCA?
Nick Brookes
It’s a skilled person who has been appointed, and they work within Deloitte.
John Mann
And who is it?
Nick Brookes
Her name is Cindy Chan.
John Mann
What percentage of your customers are repeat customers?
Nick Brookes
There is a large volume of our customers who are repeat customers—existing customers, as we would call them. And customers do tend to come back to take that product.
John Mann
What percentage of your customers have been turned down by a credit union immediately before?
Nick Brookes
I wouldn’t have that information; I wouldn’t know that they had been turned down by a credit union.
John Mann
Why wouldn’t you know that?
Nick Brookes
I wouldn’t be aware of a decision that was made by a credit union in relation to their credit.
John Mann
So your staff wouldn’t ask that?
Nick Brookes
We have an online application. We view a lot of information that is supplied by the customer as well as from credit reference agencies, and any detail that we have in relation to the customer as well. So, if they have had previous accounts with us, we will also take that into consideration.
John Mann
But you wouldn’t ask them if they’d been to see a credit union?
Nick Brookes
It’s an online application; I’m not aware that that is a question on the application, no.
John Mann
And how many minutes would it take from applying to receiving a decision? What is the quickest that that can be done?
Nick Brookes
A decision can be made, in terms of your application and the process, within 15 minutes.
John Mann
Is it possible to do it quicker than 15 minutes?
Nick Brookes
Again, it depends on how quickly you can complete the application details—
John Mann
So what would you say is the quickest time it can be done within, and receive a decision on?
Nick Brookes
I don’t know what the quickest time is that you could go through that. But we have, on average, a period that is between five and 15 minutes.
John Mann
Having completed the application, what is the quickest time in which a decision can be made on it?
Nick Brookes
Decisions are made instantly on many occasions. All the information is processed and decisions are made instantly on most occasions. That is usual within the credit industry. Most decisions for credit cards, loans and other types of short-term credit are made instantly.
John Mann
I ask again because I didn’t get the precise figure: what percentage of your customers are repeat customers?
Nick Brookes
It is a large percentage, in excess of 90%. That is existing customers, not necessarily repeat customers.
John Mann
What is the difference between “existing” and “repeat”?
Nick Brookes
An existing customer is somebody who takes out loans on a relatively infrequent basis.
John Mann
So they are repeat customers? More than 90%?
Nick Brookes
Yes.
Chair
Sorry, just to be clear, what do you mean by “repeat customers”?
Nick Brookes
I thought you were asking whether they are repeat customers as in, lending the following month after a loan—
Chair
I see. Regular and repetitive you term “repeat”, whereas a return customer is one returning after an interval?
Nick Brookes
Once you have taken an account you are classified as a customer and you have an account with us. At that point, you can come back.
John Mann
Would you regard it as appropriate to borrow money in order to spend it immediately with a bookmaker?
Nick Brookes
No.
John Mann
Some university research has just come out and there is a phrase being used by teenagers, particularly in London: “Let’s go Wonga a pizza”. Would you regard it as appropriate for teenagers to Wonga a pizza?
Nick Brookes
I’m sorry, I don’t understand what “Wonga a pizza” is.
John Mann
It is a phrase being used by young people whereby, in order to have the cash to keep up with their cohort, they put in an application, even a repeat application, for small amounts of money to pay for a pizza. Would you regard that as an appropriate reason for lending?
Nick Brookes
I think that the product is there for specific reasons and, if used appropriately, it is a perfectly legitimate product. How customers use the money that we advance them is a difficult aspect to control. The money is deposited into their bank account. We do rigorous checks on those customers, so if a customer is coming in we will assess their credit reference and their existing accounts with us, and look at any information that they provide to us at that point. How they then spend that money is something that we don’t control.
John Mann
There is research that says that in youth culture, particularly in London, the concept of, “Let’s go Wonga a pizza” is now prevalent. Are you comfortable with such a concept?
Nick Brookes
I have no knowledge of that activity. It is something that I could look into, but I have no knowledge of the “Let’s go Wonga a pizza” that you refer to.
John Mann
You do now. Are you comfortable with that concept in terms of youth culture?
Nick Brookes
When we lend to people, how they then use that money is a decision for them.
Chair
On the specific point, perhaps you would come back to us.
John Mann
A five year-old in my constituency asked, as a Christmas present from his parents, for money from Wonga. Why do you think that would be?
Nick Brookes
I couldn’t comment. It is impossible for me to tell why that would be.
Chair
Five-year-olds do ask for a wide range of things from their parents for Christmas.
John Mann
They do. You will have a view on it. Where would the five-year-old have picked up the information that would lead him to request, as a Christmas present, money from Wonga?
Nick Brookes
I have no idea where he would get that information. We have reviewed our marketing, as I have said, and taken our adverts off TV.
John Mann
Have you been criticised by the Advertising Standards Authority?
Nick Brookes
We have received criticism in the past, but, as I say, we have taken our adverts off TV, we stopped with the puppets immediately and we are in the process of taking our logos off the Newcastle United shirts for children. So we have listened to that; we think it is appropriate to do so.
John Mann
Some 59% of complaints about you to the Financial Ombudsman Service have been upheld. Why do you think that figure is so high?
Nick Brookes
The latest figure I have is 52%, which I think is in line with other banks. I think Santander had a very similar upheld rate. We have a limited number of complaints that go to the Financial Ombudsman Service. The Financial Ombudsman Service is there to take a judgment as to what they feel is the right decision. Whether to uphold the complaint at that point in time is at their discretion.
John Mann
What rate would you regard as acceptable for your new business model?
Nick Brookes
We hope that with our new business model we would have fewer complaints going to the Financial Ombudsman, and we would hope to have a better rate. But we are a business that has lent in large—
John Mann
I am sure you have a target. What would your target be?
Nick Brookes
We do not have a specific target for that.
John Mann
Would 50% be acceptable?
Nick Brookes
I am not going to get into a hypothetical percentage. We do not have a target for that.
John Mann
The real figure at the moment is 59%. That is not hypothetical. What is the major problem area that you have identified which has led to this 59% figure?
Nick Brookes
I do not have those details in front of me.
John Mann
But you must, as a business, have looked at what your major problems are which have led to such a high complaint rate. What is the major problem you have identified? What are you are doing wrong?
Nick Brookes
A lot of the information I see at the moment relates to affordability issues. That is one of the areas I have been working on heavily over the past couple of months. As I said, we have made significant changes to how we assess those applications, to make sure that we do have affordable loans and sustainable products for those customers. I have been very focused on dealing with this area. A lot of the information I see coming back from customers relates more to the fact that we are no longer able to make loans to those customers, and that is creating financial difficulties for them at this point in time.
John Mann
Would you consider adding a question to your application about whether the individual has considered a credit union loan?
Nick Brookes
We could look into that. Within our website there is a lot of information around customers’ options. It clearly states how or where our loans should be used and what the products are there for. It also quite clearly signposts charities and debt advice services that customers can use. I can look into that for you.
John Mann
It would be helpful if you could respond to the Committee when you have done that. Thank you.
Chair
Do you ask people what they are going to spend the money on?
Nick Brookes
We have some information relating to the key reasons for taking out a loan, which tend to be for household bills, repairs, cars and general household items.
Chair
Do you go back to customers who have previously taken out loans, to ask them whether that is what they spent their money on?
Nick Brookes
That is not a routine activity. We occasionally do ad hoc surveys and reviews—
Chair
Is that something worth considering?
Nick Brookes
It is something we can consider, absolutely.
Alok Sharma
Mr Brookes, you told us that Wonga is a changed organisation, but you have also told colleagues that actually people can get a loan within five minutes. That is what you have said. Can you tell us precisely how the system has changed within Wonga to allow you to identify customers who are vulnerable and make sure they are not taking on loans they will fall into trouble with?
Nick Brookes
The first point is that the speed of the decision does not mean that there is an ease of credit. Most loan or credit card decisions as well as short-term lending decisions will be instant for the vast majority of applications. That is usual within the financial services industry. What has changed is that, when we looked at how we assess affordability, it was apparent that although rules were in place they were not sufficiently robust to identify—
Alok Sharma
You are talking in general terms. Can you give us a precise example of where those rules have changed?
Nick Brookes
One of the key things we looked at was the level of the loan in comparison to the individual’s income, and whether we felt that was an affordable ratio and they would be able to sustain it and repay the loan. We also looked at their past performance with us. If they had had difficulty on a previous loan, we decided to have what we term a cooling-off period for a period of time as well. So there are a number of different things—
Alok Sharma
You did not have that before? There were no cooling-off periods before?
Nick Brookes
There weren’t, no. So we have introduced a number of different measures—there is quite a large volume in total—to address a number of different factors. There are individual cases that you need to look at. Some people may be suffering in terms of affordability because they have other external debt, such as credit cards or charge cards or loans. Other people may have a different challenge, which is just their everyday expenditure, which we need to balance off and smooth out. So there are a number of different measures which we introduced to make sure that we felt very comfortable with the assessment of affordability, and we talked to the FCA on that for quite some time.
Alok Sharma
So you have had this voluntary agreement with the FCA but, going forward, where people start to fall behind, apart from this voluntary settlement, does Wonga do anything to help those vulnerable people, or not?
Nick Brookes
Absolutely. There are a number of measures. We help people throughout the whole customer journey. When a customer comes to Wonga, it is very clear: we put on the home page how the loan works, and it is immediately apparent what you are going to pay for it in actual pounds and pence, so you have a clear understanding.
Alok Sharma
That is fine; we get that. The question I am asking is: if somebody falls behind, what help, if any, do you provide?
Nick Brookes
We provide substantial help, as I mentioned earlier. You can contact us and we will set up a repayment arrangement for you. What that effectively means is that we will put you on payments that are lower and spread over a longer period of time. We instantly stop any further fees and credit going on to the account. You can do that even before your payment is due. If you do not contact us, we give you the grace period that I talked about. We only have a 30-day period where we will charge as well. Those aspects are very favourable when you look across not just our market, but the consumer finance market in general. In the worst-case scenario, which is often talked about, if a customer comes to us and tells us that they are experiencing difficulty, it may be that they actually pay less interest than they would have done if they had fulfilled the loan on time. They could come to us two or three days before it is due.
Alok Sharma
You said that your TV ads have gone. Your chief executive took that decision. Is Wonga still engaging in unsolicited marketing? Are you cold calling people?
Nick Brookes
No.
Alok Sharma
Are you text messaging or sending mailshots?
Nick Brookes
No.
Alok Sharma
Nothing at all? There is absolutely no cold calling going on at all?
Nick Brookes
No, nothing of that nature.
Alok Sharma
Nothing unsolicited?
Nick Brookes
No.
Mark Garnier
The CMA recently announced proposals to encourage the development of a high-quality price comparison sector for payday lenders. Why do you think it has taken such a long time to come about?
Nick Brookes
In terms of how long it has taken for that report to come out, that is a good question. We fed into that study. We were involved in it. We think it is something that should be encouraged if it can be done commercially. We would also say that it should include other forms of credit, which we know our customers use, such as overdrafts or credit cards or other forms of short-term credit that are comparable sometimes with a short-term loan. It will be interesting to see how that develops. Everybody expects the market to contract in terms of the number of people offering short-term credit, which is why we would encourage other forms of credit to be offered alongside that.
Mark Garnier
In the previous evidence session, you may have heard Professor Gathergood’s evidence on shopping around, where the credit referencing sector acts against the interests of shopping around. Do you have any thoughts about that?
Nick Brookes
Once a credit search is registered, once you make an application for credit, you can do quotation searches, and they are used sometimes within the insurance industry or sometimes for mortgages. It is less usual with things like credit cards, loans or short-term lending when you make a specific application for credit. In situations where you have some sort of price comparison site, there is value in that, because you are able to make a decision based on what is in front of you at that time and then pick the right company to move forward with on your financial solution.
Mark Garnier
Getting back to this question of the price comparison thing, irrespective of the CMA, why do you think the market has not developed a price comparison sector?
Nick Brookes
In terms of why that has not been something that any of the price comparison sites have picked up and included, I am not sure of the details behind that. That is a question for those particular sites that operate those services.
Mark Garnier
You must have been curious as to why it has not happened.
Nick Brookes
It would appear unusual when you look at the number of lenders within the marketplace and when you compare it to insurance, but I do not have any details as to the reasoning or the rationale or their position on that and why it does not exist.
Mark Garnier
But you would welcome something.
Nick Brookes
We would. We fed into the report and we would be happy with that. We would like it to include other forms of credit that we see as similar to our own in terms of facilitating short-term lending such as overdrafts, and unauthorised overdrafts as well.
Mark Garnier
I think it is very important not to isolate the payday lending sector.
Nick Brookes
Absolutely.
Mark Garnier
The Advertising Standards Authority ruled that one of Wonga’s adverts breached the code of conduct because it failed to disclose a representative annual interest rate. Is the APR an appropriate way of trying to value that type of thing? When you have got to the stage of a four-digit APR, is that the right way of doing it or is there a better way of trying to compare prices?
Nick Brookes
It’s a debate that has been had a number of times. Our view is that it is far better to show the customer exactly what that loan will cost and what the total cost of that credit is. On our site, you can clearly see, if you want to borrow £150 for a period of days, for example, what the actual cost is in pounds and pence. We think that is a far more meaningful number to show customers.
Mark Garnier
So a two-week loan of £150 will cost you £200 at the end? That type of thing?
Nick Brookes
Exactly. It is an actual pound value so the customer can then make a decision as to whether that is something that they feel is appropriate for the amount they are borrowing or whether that is something that is affordable for them. We have always set that out very clearly and transparently in terms of the front page that the customer goes to.
Mark Garnier
And if there are price comparison websites, that type of information would be more useful than the random high APR?
Nick Brookes
I think so. If you could put in something that was, again, £150 for 15 days and see what the total cost of that was, I think that would give you a good comparison. I think for customers to try to understand the complexities of the APR calculation it becomes a meaningless number. What the customer is interested in is knowing exactly what they are going to pay for that credit for that period of time and then making an informed decision as to whether they think it is appropriate or an affordable position for them to be in.
Mark Garnier
On a wider point, I seem to remember reading somewhere that there are 27 different ways of calculating an APR. Is there a settled way that people agree on yet?
Nick Brookes
There is a standardised way that you have to calculate the APR, which is a very complex way of doing it for things such as short-term loans.
Mark Garnier
So, on balance, were there to be a price comparison website, it makes far more sense saying “A loan for this amount of money for this period would cost you a repayment of x”?
Nick Brookes
I think, from a customer’s point of view, that is the information they would like to see.
Mark Garnier
And everybody can understand that.
Nick Brookes
Yes, it is far easier to understand.
Mark Garnier
Fantastic. Thank you.
Chair
You said earlier that you had cancelled the TV ads because of the effect that they might have on children, and I think you cancelled those in July in the UK. Why have you been running them since July, and up to the end of the year, in Poland?
Nick Brookes
When we made the statement in July around the puppets coming off, we committed to doing that within the UK and we said that by the end of the year, it would be off in all the different regions. There is one reference to the puppets in an advert—it is a single frame, I believe—which has been run in Poland, but we are committed to removing the puppets in their entirety. It was there was a link so that people would understand and associate the Wonga brand at that point in time, but we are removing it.
Chair
We have asked you for some further information that relates to culture today. How far down the line, in percentage terms, to improving the culture to the point that it is acceptable do you feel that you have moved so far?
Nick Brookes
I think there has been a lot of progress on changes to the culture, with new people joining the organisation, in particular the chairman, people like myself and, as I said, we have a new group CFO and a new UK MD. I think where the challenge now lies for our business is making sure that that gets embedded within the organisation.
Chair
It sounds like a familiar story.
Nick Brookes
We have made a lot of progress very quickly.
Chair
Okay—I am asking you for a percentage estimate of that progress.
Nick Brookes
That is a good question. Internally within Wonga, there is a real force of momentum. We know that externally things will be looked at cynically, but we have changed a lot and we are making a lot of progress, although we are not there yet.
Chair
Okay, you’ve had 60 seconds to try to think of a number, somewhere between nought and 100, isn’t it?
Nick Brookes
It is. I would say in terms of where we are—
Alok Sharma
It is not a minus number then?
Nick Brookes
Absolutely not. We have made substantial gains, but I think we are probably close to halfway.
Chair
So you have made 50% of the progress you need. As a result, there is a better appreciation that many of the people that you have been lending money to are very vulnerable. What we are trying to address here is an enduring and complex problem, not amenable to easy fixes or benefiting from political soundbites. Do you agree with that?
Nick Brookes
I would. It is a complex area and we are ensuring that our product meets those needs. Part of the cultural change is to make sure that we not only have the right products for the customers, but have a sustainable product going forward. We are looking at how we can provide sustainable products for the customer range that we serve as well.
Chair
You said that you are halfway down the road to the culture that you would consider acceptable. We are going to be keeping a close eye on the other half coming through. Thank you very much for coming to give evidence this morning. We are now going to move straight to panel 3, with Lloyds. Examination of Witnesses
Witnesses
Martin Dodd, Customer Services Director, Lloyds Bank, and Stephen Noakes, Director of Mortgages, Lloyds Bank, gave evidence.
Chair
Good morning. Thank you very much for coming to give evidence to us. It is still this morning. I will begin by asking why you had so many complaints to the Financial Ombudsman in the first six months of this year.
Martin Dodd
I would look at our complaints story. Over the last two to three years we have made quite significant public pledges. Our CEO himself said that we would reduce complaints coming into the organisation by 50%. He made a commitment that we would reduce the complaints per thousand, so that you could look at it on a benchmarkable basis against our peers from over two complaints per thousand to a figure of one complaint per thousand by the end of 2013.
Chair
Is that one complaint per thousand—?
Martin Dodd
That is one complaint per thousand customers.
Chair
But by most measures, you are the worst performer, are you not?
Martin Dodd
I would disagree—I will explain why.
Chair
What measure are you using to reach that?
Martin Dodd
I would do it on two measures, which I think are the most critical. The first is complaint volume: we have reduced our complaints by 50% over the last three years. On a comparable basis—which is the complaints per thousand measure that the FCA asks us to use, so that one can see a more comparable performance—our performance at one complaint per thousand is much better than our peers, such as Barclays, Santander and RBS, who would be at two or three complaints per thousand customers.
Chair
That is not what we estimated, but it would be helpful if you could send us that information, together with the peer group estimate, and we could send it to your peers and see what they have to say about it.
Martin Dodd
I am very comfortable about sending that.
John Mann
What percentage of people with PPI have not yet complained?
Martin Dodd
Effectively, we have got two different groups. There is a group of customers we have written to, saying where we have identified a failing with PPI. We have written to over a million customers. Some 65% of those customers have not replied to the letters we have written and 35% have replied.
John Mann
What percentage of your cases comes from claims companies?
Martin Dodd
On PPI, or in general?
John Mann
On PPI.
Martin Dodd
On PPI, it varies week by week, but approximately 65% of our volume comes from claims management companies.
John Mann
What is the highest percentage of the compensation money that claims management companies are currently taking?
Martin Dodd
It varies by claim management company, but we see a range between a figure of 25% and about 35%.
John Mann
25% to 35%. Are there any higher—are there any claiming 50% or 60%?
Martin Dodd
I am not sure. What we tend to see, from talking to our customers, are amounts in that range.
John Mann
But there could be.
Martin Dodd
There could be.
John Mann
What percentage of the money paid out is going to claims companies?
Martin Dodd
When we assess our customers’ complaints, we review them based on the merits. When we pay any kind of redress we pay directly to the customer. We do not pay the money to the claims management company. We allow the customer to talk to the claims management company.
John Mann
But you would have a clear window on that, because the information is provided. What do you estimate is the amount of money that is actually going to the claims companies? Would you say it is 25% to 35%?
Martin Dodd
For the customer who has chosen to go with a claims management company, if you take an average PPI case of £2,500, those customers would be sending 25% of that figure to the claims management company.
John Mann
For most of the claims management companies, all that they are doing is sending you a letter.
Martin Dodd
That’s correct.
John Mann
And doubtless there is a variety. Some will provide you with useful information and some will provide you with no information within the letter; in some cases, just a letter.
Martin Dodd
We get a mix in terms of the quality of the complaints that come in. At the better end of the scale, we would have a letter from the customer explaining why they thought PPI was mis-sold. In a number of instances, we would have a questionnaire issued by the ombudsman which gives more relevant information. Those are the best cases for us to assess. At the other end, we would have examples where a customer is claiming for PPI and they have never held PPI or, alternatively, it is a very generic letter with a number of allegations, but with no information to back that up.
John Mann
It’s fairly straightforward, isn’t it? If you get a letter from an individual, it is very straightforward for you to process that information and come to an accurate decision.
Martin Dodd
As long as we have enough information to gather our decision, yes, it is straightforward.
John Mann
How many cases of PPI claims have been fought over and referred to the Financial Ombudsman Service?
Martin Dodd
If we look at our numbers at the moment, we receive, although the numbers vary, about 10,000 complaints a week in the Lloyds Banking Group. We are effectively at this moment in time paying redress to customers in 80% of those cases, and we are seeing 13%—about 1,300—going to the Financial Ombudsman.
John Mann
So they are the ones which are disputed?
Martin Dodd
Yes.
John Mann
When one only needs to send in a letter, what is wrong with what you have done? Two thirds of the people who have been sent a letter by you have not responded, and of those who have responded, two thirds are going via a claims management company, which doubtless has been ringing them up, like they ring me 10 times a day at home, promoting themselves. What is wrong with your system? You are the ones at fault, so why are people not responding? Why are the majority of those who do respond going through a claims management company, which adds nothing to the process?
Martin Dodd
I take it in two parts. The first part is that the customers we are writing to are not using claims management companies. Where we have written to a customer, they are coming back with the information which we have sent, with a questionnaire giving us the information to allow us to review the complaint. We have tested why two thirds of customers are not coming back to us. The feedback from a number of those customers is that they do not believe they were mis-sold. They were happy with the product which they bought at the time from their branch, for example, and they do not want to complain. We have tested some of this. If I look at why people are using claims management companies, that is a question we continually ask ourselves. We try and work with media, we try and put announcements on our website saying that customers do not need to use claims management companies in any way, shape or form. It is free to come to us. The case gets assessed in exactly the same way. We are constantly trying to reach out to our customers and tell them not to use claims management companies but to come direct to us.
John Mann
Why are some customers not getting sent a letter?
Martin Dodd
We have looked at where we believe we had failings in our sales processes with the product. We have identified those customers where we think that there could be a failing and we have written to those customers.
John Mann
But as you are getting lots via claims management companies, why are you not writing to all your past customers, where there is a theoretical possibility of PPI mis-selling?
Martin Dodd
The work we’ve done with the FCA on this matter is that we believe that it would be disproportionate to write to everybody because then you are writing to everybody who has ever held a policy. This is about those customers who believe that they were mis-sold.
John Mann
But considering the scale of the problems you are in on this, why would it be disproportionate? Considering the numbers coming through claims management companies, why would it be disproportionate for you, who are at fault, not to be writing to everyone possible and informing them what they can do about it?
Martin Dodd
We are writing to all the people where we believe there was a failure with the policy. We have identified those customers and we constantly look to see if there is any other group of customers or cohorts we should be writing to.
John Mann
Let’s take a subset. Parts of your organisation in the late ’80s, early ’90s were basically giving PPI to everyone without asking. Why aren’t all those people being written to?
Martin Dodd
I don’t believe that we have any evidence that we have systemic issues like that. I haven’t seen any and I have looked at all the areas of PPI. We don’t have brands or parts of our business where we are just giving PPI to everybody. We know what the penetration rates are by brand, by channels, whether it was in a branch or over the phone. We know what the sales process was at the time and, where we have identified failures, we are writing to customers.
John Mann
Sorry—just to labour this point: how can that possibly be true, when claims management companies are bringing forward 65% of the claims? How can it possibly be true that you are doing your job properly now, when claims management companies speculatively ringing up anybody and everybody are bringing forward so many claims? If you have such good information, you would be getting to those people before the claims management companies. Something doesn’t add up in your approach here and you are the ones who are at fault.
Martin Dodd
The difference is the specific customer circumstances. We can identify failures with the product and failures in the way we sold the product. What I can’t identify, for example, is did the customer have a pre-existing medical condition; or did they have existing cover elsewhere; or did they have savings at that time? That is specific to that particular customer and until we get that information, I can’t make a judgment one way or the other.
John Mann
I do find it rather unsatisfactory. Let me ask a final question about alternative redress. What percentage of your claims have been settled using alternative redress?
Martin Dodd
Alternative redress is a form of redress within PS10/12 as part of the guidance. Over a period of time, just on our loans—because you can only use it on loans—we have used it in 20% of our total loan claims.
Chair
Isn’t part of the reason why people who should still be prepared to come direct to you are going to claims management companies because they don’t trust their bank?
Martin Dodd
We’ve looked at this and we’ve looked at the research. Why is it that people are still using claims management companies? I think there are a number of answers. One is potentially that there is a lack of trust.
Chair
That’s a serious one for a bank, bearing in mind that trust is what banking is all about, don’t you think?
Martin Dodd
I agree.
Chair
And we are now six years down the line from this crisis and people are still very distrustful of their banks.
Martin Dodd
There’s a combination of reasons. There are also reasons where it is convenient. So, a claims management company has phoned the customer on a number of occasions—
Chair
That’s a perceived convenience. You will tell me, if I pressed you, that it is just as convenient to go through you.
Martin Dodd
I would argue that it is more convenient to go direct to us.
Chair
Well, there you are. So you are now saying that it is more convenient. So it is not, in fact, convenience; it is perceived convenience, which is part of trust.
John Thurso
Can I come back to the area that the Chairman raised at the beginning around complaints? Mr Dodd, you are the customer services director?
Martin Dodd
That is correct.
John Thurso
Is there anybody between you and the chief executive in the reporting line? Where does that put you in the pecking order?
Martin Dodd
I have a dual reporting line. I report to Alison Brittain, who runs our retail bank, and David Oldfield, who runs our group operations. They both report to the chief executive.
John Thurso
Right. So in your role, are you the sort of point person in charge of complaints and the way the bank deals with complaints?
Martin Dodd
I am.
John Thurso
What is your assessment of—I don’t have the particular figures for Lloyds. This is an industry-wide figure from the Financial Ombudsman Service. I want to leave PPI out of this, because we have done that. Other areas, for example, package bank accounts, are upholding something like 70% of the complaints. What is your comment on that?
Martin Dodd
So, when I spoke at the start about us having specific targets around compliance handling, one is about volume, the other is about quality. The best measure for me, in terms of quality of a financial services firm, is upholding the right of the Financial Ombudsman, because they are independent; they get a view of all firms’ complaints. So we have a target and have had a target for the last couple of years, where we expect each of our categories—whether that be banking, mortgages, life and pensions—to be at 30% or below. The reason for choosing the 30% figure—that was in consultation with the ombudsman, talking to the ombudsman about what they see as best practice and what they deem to be good complaint handling from an organisation, and we have agreed with them that, at a figure of 30% or below, they would be seeing consistently good complaint handling. Our figures for the last six months, and then the previous 18 months before that, have been at 30% or below, on average, across all those categories.
John Thurso
So if you were on average, it would be around about the 30% mark or just under, wouldn’t it?
Martin Dodd
It’s actually been under. So it is 29%.
John Thurso
Yes, in the high 20s, whatever. Do you really think that an external body that basically must be overturning 30% of the adjudications your internal system has made—or even 25%—is an indicator of good service?
Martin Dodd
So I think what it does do—it is a funnel, in aspect. If you take our overall complaints and then you work through to the complaints that actually go to the ombudsman, excluding PPI—so if we can keep on that theme—only 1.5% of our complaints end up with the ombudsman. So in 98.5% we reach a conclusion with our customers. Of the 1.5%, they are only overturning less than three in 10. So if you look at our total complaints, it is less than 0.5%. We think it is—
John Thurso
I can understand why you are in the banking business. I was in the restaurant business. The way I look at it, that is an appalling statistic of failure on the part of my management—if I had 30% of the complaints made externally about me being upheld by somebody else—whereas the banking industry seems to regard that as something of a triumph.
Martin Dodd
I wouldn’t say it was a triumph. What I would say is that if you compare us against our peers, that is market leading.
John Thurso
But you see, again, that is a slightly false thing to do, because I think exactly the same could be said about all your peers. It is an industry-wide problem. Actually, perhaps you ought to be looking for a different benchmark, like any other service industry.
Chair
Have a go at answering that.
Martin Dodd
Let me have another go at answering it. The 30% is not just that the ombudsman’s overruled our decision. There is an element of they have disagreed with our decision. There is also an element of, “We agree with your decision, but actually you’ve paid the customer £100 for the distress and inconvenience and we think it should be £150.” So 10% of that 30% is just what I would call a minor disagreement on how much distress and inconvenience. The other 10%—another third of it—is, when we have assessed the complaint we have assessed it on the facts we have at the time. When the complaint goes to the ombudsman, the customer gives the ombudsman additional information. When we find out that additional information with the ombudsman, we agree that the change should happen.
John Thurso
You were here, I think, for the first panel.
Martin Dodd
Yes.
John Thurso
And you heard one of our witnesses describe the banks’ complaints procedures as a shambles and my question that a shambles can mean it is just badly run or it could mean it is well defined to ensure that the customers do not get redress, broadly. What is your rebuttal to the comment that was made in that session.
Martin Dodd
So my rebuttal would be on three fronts. The first one is, we went out with publicly committed complaints-reduction targets. We have reduced complaints by 50% over the last three years. We have also gone out with quality measures around ombudsman change rates, to be at 30% or below, and we have achieved those. Both of those measures are market leading. I think my final point is, if you are a customer in Lloyds Banking Group—whether it is Halifax, Bank of Scotland, Lloyds—if you walk into one of our branches or you phone one of our call centres, we resolve your complaint 90% of the time there and then. We think that the training and support we give to our front-line colleagues—we give them the ability to go to an expert to get the answers there and then, if they need to do so—is market leading: 90% of complaints are resolved there and then. We don’t think anybody else is achieving that.
John Thurso
I could probably go on at this for ages, but I will ask just one question. If somebody comes up to the desk and says, “I have a problem. Can you sort it?” and the person at the desk says, “Yes, I can,” and they deal with it, is that a complaint that has been resolved? What constitutes a complaint?
Martin Dodd
That is in the FCA guidelines. A complaint is what they call an “expression of dissatisfaction,” so this for me is where something hasn’t happened. An easy example would be where I cancelled my direct debit last month and it has gone through in error; why is that? That is a complaint.
John Thurso
That is the level that is getting fixed 90% of the time?
Martin Dodd
That’s correct.
John Thurso
90% is quite low for that sort of thing, isn’t it?
Martin Dodd
We have a whole range within that.
John Thurso
I think I will leave it there.
Chair
Isn’t the source of the problem behind the 30% figure the allegation that banks see the cost of complaints as a business cost?
Martin Dodd
Each firm is different, so I will comment on what Lloyds does. Complaints are an integral measure to us, so our CEO asks me to come to his group executive committee every month to walk through the volumes coming into the organisation. What are they? What are we doing about it? What is the quality of our complaint handling? How many are we resolving there and then? What are the volumes going to the ombudsman? What is the quality of the decisions at the ombudsman? There is a complete end-to-end review of our complaint measures.
Chair
But this is a business cost, isn’t it? What happens in John Thurso’s restaurant is that people go to the restaurant next door very quickly; but in your business, they don’t. I am sure they all went to John’s restaurant, but that is what they would do if he was running a complaint failure rate of 30%.
Martin Dodd
So what we see with complaint handling—I will do the polarisation—is that where we deal with complaints badly, where we give the wrong customer outcome or where we take too long, customers leave us. They go to another provider. Interestingly, when we do a great job with complaint handling, where we resolve something very speedily and do it well, customers bring us more business. Their feedback on that is, “I had an issue, a problem, and you were there for me. You fixed it. I trust you with my business.”
Chair
You’ve just given a piece of evidence that flies in the face of all the evidence that this Committee has taken for many years, which is that switching is perceived, often wrongly, to be very difficult. There is huge inertia in retail banking that is inhibiting genuine competition. Are you challenging that conclusion? It is a conclusion that lies behind the CMA’s decision to go for a full competition investigation.
Martin Dodd
I’m not challenging that conclusion. I was sharing what we see from our market research. With very good complaint handling, customers bring more business to that brand and that person. Where we do bad complaint handling, we see customers leave us.
Chair
I think we need the evidence that, in this rare pocket of retail banking, you are securing high levels of loss to other banks when customers are discontented. We had better have those figures stood up.
Stephen Noakes
Can I just add an additional comment? I want to give a sense that, although Martin is the customer services director, complaints are an important part of all product teams. In each product team, there is a deep understanding and analysis of the root cause of those complaints. One of the key metrics that we look at is customer advocacy and net promoter score, and there is no doubt that the more complainants you have, the greater the detrimental impact on that particular metric. It is actually a key part of the commercial part of the business.
Chair
I don’t disagree with that, and it is the point that I made. It is a business cost, so it is a key metric.
Stephen Noakes
But one that we are looking to minimise, rather than accept as just a part of doing business.
Chair
Well, what does minimise it? Whether ultimately it needs to be competition or whether other proxy forms of downward pressure can be brought to bear on it, that is the question. You have said that there is this very particular piece of evidence, which so far we have never had put before us; but it looks as if we might see it.
Mr Love
Can I come to basic bank accounts? The Parliamentary Commission on Banking Standards wanted a voluntary agreement that would set minimum standards for a basic bank account. That was 17 months ago. Can you report any progress in reaching those agreements?
Stephen Noakes
So, Andy, I will take that one. Certainly from a Lloyds perspective, we are pushing ahead with this. We have now got 4 million basic bank accounts. Basic bank account provision includes full ATM access; it is also debit cards and access to online and mobile services. The Banking Standards Review Council has still got further work to go. Some of that was heard in earlier evidence at this Committee today, but we are working with Treasury, and through the Banking Standards Review Council, to move forward on that agenda.
Mr Love
Well, you have outlined what Lloyds are doing, and that is complimentary, but is there any agreement out there with other banks about what would constitute minimum standards for a basic bank account? Have you reached a conclusion about what a basic bank account consists of?
Stephen Noakes
So that is the work that the Banking Standards Review Council are undertaking. There are still areas of debate, as you heard earlier on in this session, in terms of undischarged bankrupts as a particular cohort of the population, where there are still questions, which need to be addressed across the industry to get a consistent standard.
Mr Love
Tell me why. We also heard that Barclays are the only major bank that issue basic accounts to undischarged bankrupts. The Co-op used to but does no longer; so we seem to be going backwards there. What is the problem with undischarged bankrupts?
Stephen Noakes
So the key question, which is being looked to being resolved, is really around the legal status of that, with regard to the lender taking on the basic bank account for a customer in that particular position. I am confident that we will get progress on that, but it does need to be something which is agreed consistently across the industry.
Mr Love
You mentioned about 4 million basic bank account holders. Of course we hear from reports in the press and among those interested in this issue that the numbers without a bank account are going up. Can you confirm whether or not overall the banking sector is living up to its responsibilities to offer bank accounts to those in need of them?
Stephen Noakes
So financial inclusion is one of the key metrics that we at Lloyds have in terms of our “Helping Britain Prosper” manifesto. It is something which our chief executive launched relatively recently; so certainly from a Lloyds perspective we are keen to include, and increase the level of financial inclusion that we are able to offer. I cannot talk for the broader industry, but in terms of the Banking Standards Review Council that is the key forum by which we should be looking to achieve that collectively.
Mr Love
We have talked about undischarged bankrupts, where there appears to be a little progress. I know that Lloyds are doing well in terms of access to the ATM network, but others are not. Can you give this Committee any reassurance that progress is being made on any of the core issues relating to basic bank accounts at the standards council?
Stephen Noakes
Yes, and in truth all the major banks were in a meeting with Treasury very recently—only, literally, in the last few weeks—where a number of these topics were being discussed. So I think both through the Banking Standards Review Council and through collective discussions through Treasury, there is a real commitment in terms of moving us forward. I recognise the questions are, “Can we really see the evidence at the moment?” and we have still yet to demonstrate that.
Mr Love
Well, that is a problem that has run through all of the sessions this morning. There is a lot of pious comment, but not much in terms of tangible, real progress. Would you accept that it is quite hard to see any tangible, real progress?