In early 2019 Lloyd’s Bank began to advertise their ‘M-word’ campaign. Chances are you’ve seen it online or on TV. The campaign is designed to destigmatise talking about money and, according to their website ‘helps people talk about money at key life stages such as getting married, leaving home, or managing your finances for Christmas’. Lloyd’s is the latest in a long line of banks who are trying to tell us how to best handle our money – NatWest, HSBC and the Royal Bank of Scotland all have similar initiatives
The commonly accepted perception is that these organisations are hugely experienced in financial responsibility, so why would we question what they have to say? Well, bankers, lenders and credit agencies all have vested interests in selling their financial products, and they all make money out of debt. We have no problem with this; in a capitalist society most people are aware of this. The problem we have is with the hypocritical nature of these banking and credit agencies telling us how to best manage our money.
The questions that should be asked is ‘are these agencies qualified in ethical terms to answer our financial questions?’ and ‘will the answers benefit us or them?’. Many people will argue banks and credit agencies are qualified to teach us all about our money. Our view is different – banks and credit agencies have acted in a highly irresponsible manner.
Let’s begin with Lloyd’s Bank. Their ill-founded and irresponsible method buying up of rival banking firms completely overstretched Lloyd’s and played a big part in the financial crash of 2008. Lloyd’s received over £20 billion of taxpayers’ money as part of its bailout, which the bank then took nearly 10 years to pay back.
This is not the only example of extreme financial irresponsibility at Lloyd’s; in 2014 the bank was fined £218 million after adjusting the London inter-bank offered rate, or LIBOR, to benefit the Japanese Yen. LIBOR is a benchmark interest rate at which major global lend to one another in the international inter-bank market for short-term loans. Lloyd’s also tried to artificially adjust the rates for the British Pound and the American Dollar. This was a blatant attempt to manipulate the market and provide benefits to some of the preferred clients that Lloyd’s has been working with in recent years.
In 2013, the bank was fined £28 million after pressuring employees into selling products that were deemed unnecessary for some clients. The bank threatened the employees with demotions and pay decreases if they did not comply. This prompted many employees to falsify information on some of the products being offered as a means of trying to reduce the potential for them to be demoted or punished in various ways for not selling enough of what they were supposed to provide to customers. Just last week the Lloyd’s banking group were fined a further £45.5 million by the FCA for the Reading branch bank fraud. Add to this the £19.2 billion Lloyd’s has paid out so far for its part in the payment protection insurance (PPI) mis-selling scandal and you can see that Lloyd’s are pretty far from the responsible financial voice it portrays itself to be.
Lloyd’s are not the only bank whose financial activities are questionable. Other banks that have engaged in malpractice scandals include the Royal Bank of Scotland – the RBS was fined £399 million in late 2014. This came after the bank assisted some customers in efforts to adjust foreign exchange rates to their benefit.
The Standard Chartered Bank engaged in money laundering activities in 2012 by hiding billions of pounds of financial transactions with Iran from the United States. The United States government accused the bank of securing funds with a country that had been known for terrorist activities and fined the bank $300 million US for its actions.
The largest single fine for any one bank in history — was the $1.9 billion fine levied on HSBC in 2012 for failing to comply with anti-money laundering regulations. HSBC paid almost $2 billion to settle allegations that its failure to enforce anti-money laundering rules left America’s financial system exposed to drug cartels. Unconfirmed reports at the time suggested HSBC was actually aware and complicit in helping money sourced from international criminal activity to be funneled through its network of banks across South America, Africa and Asia.
In 2014, the Serious Fraud Office found that Tesco Bank had engaged in actions like mis-selling insurance policies and writing off some of its profits to avoid paying taxes. Tesco has been hit with £382 million worth of impairment charges, although the total may be higher depending on the full results of the investigation.
The list of banking scandals in the UK goes on and on. Since 2008, the activities for the UK’s five largest banks alone have incurred over £25 billion in fines by various regulatory agencies around the world including the UK’s own Financial Conduct Authority (FCA).
I could have listed countless more examples of financial malpractice, extreme financial irresponsibility and downright criminal practices. These carefree banking practices are not victimless – they have affected millions of people around the world, creating financial hardship while the bosses at the banks enjoy lavish lifestyles.
Earlier we asked what the issue in listening to banks is. Well, these are exactly the issues people should know about before making their minds up about banks. And, as scandals involving banks continue to be uncovered, are we as a population so fatigued by these stories that we now accept them as standard banking practices? Should we not expect far more from our financial institutions? Banks should be publicly held to account, and not just be subjected to a fine. After all, these banks can easily afford to simply pay off any financial penalties. Monetary fines are not an effective deterrent for extreme financial mismanagement.
Should we really listen to agencies like these whose morally reprehensible actions have wide ranging detrimental financial effects, and who continue to act irresponsibly? Furthermore, should we be letting these banks teach our young people about fiscal responsibility and financial capability?
As advocates of completely impartial financial education and financial capability initiatives, Red Star Education has been aware of these issues for some time. We have no interest in and nor do we receive any kind of backing from any financial agencies; in fact we actively rail against financial teaching initiatives from the banks mentioned above. But still we see these organisations pay lip service to a vitally important subject matter with flashy, expensive TV advertising campaigns. But where is the substance? Where is the integrity? We are not bankers, or lenders, we are educators. Which voice would you trust? Hey Lloyd’s Bank, wanna talk the M word? Yes let’s do that – I have a few questions for you.