Introduction

Often the stories relating to banks indulging in forced cross-selling or mis-selling of their products or services under retail banking focus on, among other things, the banks’ attitude towards their customers, the customers' suffering or non-compliance with regulatory instructions. These discussions rarely cover the banks’ internal processes and their organisation-wide culture, management strategies and employee behaviour.

Another point worth noting is that employees are an integral part of the strategic framework of any organisation, greatly influencing a bank's ability to market its products and services effectively. Yet, discussions and analyses frequently overlook the importance of employee roles and the perspectives of employers towards their workforce.

Technically, cross-selling of products by banks refers to the process of selling third-party products to customers when a customer approaches a bank for a primary product or a service. Mis-selling, on the other hand, refers to the act of selling products or services which are either not actually wanted by the customer or not suitable at all for the specific customer.

There is a fine line between a normal sales push and an abnormal or unethical sales practice. Bank employees are within their rights and have responsibilities as well towards educating customers about their services and products, which would benefit the customer and at the same time boost the bank's business. However, they also have the responsibility to ensure that the customer is given all necessary information, the customer understands the product, and the product suits the customer's profile and requirements. When the tendency to increase the bank’s business outweighs the customer requirements and suitability, and priority is only on selling the products or services without keeping an eye on the customer requirements and suitability, the fine line is crossed.

A case in point

On September 8, 2016, a major bank in San Francisco, California, which ranks among the largest in the United States by assets, revealed a $185 million settlement with three US regulatory bodies due to extensive misconduct in sales practices within its consumer retail banking division.

On April 12, 2017, ‘The Economist’ wrote that the bank castigated its former boss for tolerating sales practices that led to the opening of more than two million ghost accounts. The story goes, as per one Los Angeles Times article, between 2011 and 2016, the employees of the community bank arm of the bank opened more than two million unauthorised customer accounts and credit cards, and sold products and services to customers under the false pretence of boosting sales figures.

The rosy side of the story that was going around included:

1. The number of accounts / service receivers increased manyfold over a short period of time;
2. Retail banking business increased, including loans, credit / debit cards and fee income;
3. Apparently, the acceptance and demand for the bank’s services and its popularity increased tremendously during a short period;
4. Employee turnover increased, and HR posed as if the bank had become more popular as a good employer, and thus many young people were ready to join the bank all the time;
5. The culture inside the bank encouraged a healthy competitive attitude among the employees for growth;
6. Some of the top executives of the bank were adjudged as ‘Best Bankers’ by many magazines and were bestowed with honours;

The darker side of the whole issue:

1. Employees were pushing customers hard for opening unwanted accounts, accepting various services / products at the time of opening a primary account, under the guise that either they were coming as a bundled facility or given free of cost or would provide additional advantages over a period of time, which were all mostly incorrect and false;
2. Customers were either not informed, or misinformed, or given wrong or half information about products / services, including the fees involved;
3. Customer contact details were misused, and signatures were forged for opening additional accounts;
4. Among the newly opened accounts, incidences of accounts with no activity / cash flow, non-utilisation of services increased;