Though India did not face the financial crisis of 2008 that made bankers from the west to sit up and think about how to regain trust of customers, lenders in our country need to do an introspection, as service in domestic banking and financial institutions leaves much to be desired
In a European conference recently, Anshu Jain, co-chief executive of Deutsche Bank made a telling statement. He said international bankers were still the subject of anger because people thought they caused the financial crisis of 2008 and their mis-management of banks culminated in the bailout of some of the large banks in the West by the exchequer, at the cost of the taxpayers. The hotly-debated subject of the conference was how bankers could regain public trust which was at an all-time low in the wake of the economic crisis that engulfed the western world.
It is to regain public confidence or to project a customer-friendly image; one of the banks in London recently went out of the way to satisfy an aggrieved customer, a refreshing change in attitude from a stiff upper lip British banker. Here is a live case that will be of interest both to the banking public and the regulators of our country:
An episode of closing the account and what transpired thereafter
A non-resident Indian (NRI) who was working in the UK returned to India a few years back for good and decided to settle down here. He gradually transferred all his assets held abroad to India and wanted to completely close his bank account held in the UK as it was no longer required by him. He asked his bank in London to close his account and remit the entire balance to his account with a bank in India. Pat came the reply asking for the International Banking Number (IBN) of his bank in India where the amount was required to be transferred for speedy transfer of funds, but as banks here do not have IBN, he furnished the Swift number of his bank in return.
The British Bank promptly closed the account and remitted the entire balance and sent an advice of remittance on 20August 2012 to their account holder. Having not received the credit of equivalent amount in his account even after three weeks, our friend sent e-mail seeking information as to the bank in India, through whom they have remitted the amount, but there was no reply. He followed this up with two more reminders, the last one with a copy to the chairman of the bank. In his mail to the chairman, he had expressed his dissatisfaction over not only the delay in receiving the amount but also the indifference of the bank’s officials in not responding to his repeated e-mails, which was not expected of a bank of their standing and reputation. For this he got a prompt reply, stating that the matter was engaging their attention and they would investigate and let him know in the matter shortly.
In the meantime, he got a credit in his account on 4 October 2012 for an amount of Rs18,535 equivalent of British Pounds 222-76 remitted by the UK bank, after a lapse of 45 days. Having got the amount, he thought that the matter ended there.
Interesting response from the UK bank
Surprisingly he received a letter from the bank on 7th November, reading as under:
“Thank you for being so patient while I have been investigating your complaint in more detail.
Having considered all the information, I agree that you did not receive the closing balance from your current account in a timely manner. I am unable to give you any explanation for our error, other than an oversight on our part and for this I am truly sorry. I also agree that our lack of response to your emails relating to this issue is unacceptable and I would ask you to accept my sincere apologies for our shortcomings in this matter.
I have received confirmation from our Foreign Payments Team that your funds were credited to your account in India on 4 October 2012.
From my review of the situation it is clear to me that you have certainly not received the high standard of service you are entitled to expect from our bank and I would ask you to accept my sincere apologies for the obvious inconvenience you have been caused.
To compensate you for the trouble and inconvenience we have caused, I enclose a cheque for Sterling Pounds 125. This amount also represents the time you have spent attempting to resolve this issue and the frustration this has caused you. I have also accounted for the cost of converting the sterling cheque in India.
I believe I’ve resolved your complaint satisfactorily following my investigation. If you would like to talk through the details of my decision, please call me or a member of my team on telephone number 0044 1204… We’re here from 8.00am to 6.00pm, Monday to Friday and 9.00am to 4.00pm Saturday.
If you are unhappy with the decision and want to take it further, you can get in touch with the Financial Ombudsman Service. You should do so within six months of the date of this letter, as they may not consider your complaint after that time. I’ve enclosed a leaflet with some information about the service and how they could help you.
Yours sincerely, Sd.xxxxx
Customer Service Team.”
The four points that deserve mention:
1. The letter contains the expression of apology three times in the letter from a British bank official, owning their mistake without in any way justifying their position.
2. The compensation of pounds 125 (equivalent of Rs11,000) is not only for the delay, but also for the trouble, inconvenience and frustration caused by this delay.
3. The most striking part is that this apology and compensation is given to a person who has closed his account and will have nothing to do with the bank in the future.
4. The letter also gives information about the Banking Ombudsman Service to take this issue further, if the customer was not happy with the bank’s decision.
Though the bank in question was at fault in not responding to the customer’s query for whatever reasons, this is truly a perfect example of making amends in customer service, creating a long lasting impact in the mind of the customer.
Of late a good number of British banks are on a firing line, having been fined successively by the US courts/regulators for breach of regulations, etc. The first to face the ignominy was Barclays Bank, which was fined over $450 million by the US and UK regulators for manipulating LIBOR. Then UK-based Standard Chartered Bank paid a penalty of $340 million to New York’s Department of Financial Services for hiding financial transactions with Iran in breach of their regulations. Another British bank, namely HSBC, as per media reports, allegedly may have to pay a fine of $1.8 billion to US law enforcement agencies for breach of money-laundering regulations.
Against these huge penalties paid by the British banks, the aforesaid instance of giving a paltry compensation by a totally different bank from the UK may appear a drop in the ocean, but what matters most is their attitude towards ordinary individual retail bank customers, who appear to be getting a fairer deal at the hands of UK banks.
So is there a lesson to be learnt from the above anecdote for the banks of our country? Though our country did not face the financial crisis of 2008 that made the bankers from western countries sit up and think about how to regain the trust of the banking public, there is a crying need for our banks too to do an introspection, as the level of service in all our banking and financial institutions leaves much to be desired.
(The author is a banking analyst. He writes for Moneylife under the pen-name ‘Gurpur’)