British banking’s toxic and aggressive culture will take a generation to change

It will take the British banking sector an entire generation to effectively change its “toxic and aggressive” culture, says a joint report by the Cass Business School and think tank New City Agenda.

The authors claim their report – “A Report on the Culture of British Banking” – is the first to study comprehensively what British retail banks have done and what they are doing now to address the cultural defects which contributed to the financial crisis and scandals that followed it.

The authors came to the following conclusions:

Poor culture: has cost banks and their customers dearly. Since the financial crisis, poor culture in banking has cost banks and building societies at least £38.5 billion in financial penalties and redress.

Since the financial crisis there have been 20.8 million complaints against banks. According to the Consumer Association’s charity Which?, consumers from the general public are more satisfied by smaller, mutual banking providers than the country’s biggest four banks.

The study had found compelling evidence of a widespread “sales culture” which rewarded staff who aggressively promoted financial products, with no regard for risk and customer needs. “This led banks to make risky loans and engage in bad practices, resulting in toxic loan books and mounting fines. This has undermined the balance sheet of the banks as well as the public’s confidence in them as trusted institutions.”

Banking customer complaints

Customer complaints (Financial Ombudsman Service data). Source: New City Agenda.

A whole generation: will need to pass before British banks have completely overhauled their culture and practices, at the current rate of progress, the authors predict.

Four large banks currently dominate the sector. Given that a whole generation of staff has been raised, and in some instances rewarded, in an aggressive culture, it won’t be until the next generation arrives that things will change completely.

The authors wrote “The ‘tone from the top’ is more positive, but many outside observers were skeptical that the ‘tone from the top’ has trickled down to branch level. There was concern about ‘the message getting lost in the middle’, and some staff reported the pressure to sell products persisted in subtler forms.”

Some change accomplished: since the financial crisis banks have implemented top-down culture change initiatives and have altered performance frameworks considerably. Subsequently, frontline employees are not incentivized solely on sales any more. Some banks told the authors they are training their workers to promote products they would be happy selling to their grandmothers.

The authors added “A lot of time has been spent on changing the outlooks and actions of senior executives.”

The authors comment, however, that cultural change in the major banks remains fragile. They fear that the message in new initiatives could get lost in the large institutions. A number of customer-facing employees still comment that they feel under considerable pressure to sell.


The report says that financial institutions need to commit themselves to consistent and continuous delivery of their culture change initiatives, which if effective will take about five years to reach their goals.

Regulators need to understand that improving competition, while plausible, will not alone deliver improvements in culture. They also need to track culture within banks. “One way to do this is observing what culture is like at the customer service coal face. Regulators should be wary of ongoing restructuring efforts which may impress investors, but result in heightened risks within the firm.”