It seems clear that the financial scandals that have dogged the industry over recent years, have taken their toll on our High Street Banks. A report in the Financial Times, which has analysed the Annual Bank Report of KPMG paints a picture of further tough times ahead for the big name banks.


Indeed, the article states that pressure on Britain’s largest high-street banks is at an “all-time high” after profits slumped 40 per cent last year, according to the study.

The Financial Times article goes on to say that:

"Mis-selling costs, mounting regulatory requirements, low interest rates and uncertainty around the EU referendum are all weighing on UK lenders, advisory firm KPMG said in its annual bank report.

Profit before tax dropped to a combined total of £12.4bn last year across Barclays, HSBC, Lloyds, Royal Bank of Scotland and Standard Chartered, in a return to levels last seen in 2013. Revenues showed little sign of growth.

However, banks paid out £38bn in salaries and bonuses last year, compared with £37.9bn in 2014. Barclays, RBS and Standard Chartered posted a net annual loss."

The article goes on to say that:

"Banks with at least £25bn of deposits must hive off their retail banking operations from riskier investment banking activity by 2019 under ringfencing rules.

Redress for past mis-selling, particularly in relation to payment protection insurance, was one of the main factors hitting profitability.

Some £14.3bn was set aside last year for redress, up 35 per cent from the previous year. During the five years from 2011, redress costs reached £55bn, accounting for 72 per cent of banks’ profits during that period.

Banks earmarked further provisions for PPI in their annual earnings, with Lloyds Banking Group allocating £2.1bn in the fourth quarter of last year.

Lenders hope the scandal will soon come to a close as the City watchdog reviews the case for a two-year deadline for PPI compensation claims.

Banks are trying to cut costs by closing branches, reducing headcount and retreating from overseas countries and operations that are no longer deemed core to their business.

Barclays, for example, has reduced its headcount by 8,000 in the past four months since the arrival of its new chief executive, Jes Staley, at the start of December, by imposing a hiring freeze.

Banks have stepped up efforts to cut branches. Clydesdale reported plans on Wednesday to close nine Scottish branches this year and 17 under its Yorkshire brand.

RBS is expected to make 50 closures in the coming weeks, according to people familiar with the situation. HSBC has closed 61 this year to date, and will shut about 56 in the coming months.

But the report said there is “limited evidence of success” with banks’ measures, with costs falling by only 2.9 per cent."

It is clear therefore that the legacy of the mis-selling scandal still looms large over the operation of the financial services sector, and the ACC is clear in wanting to see banks behave in a way that treats customers fairly, and we will work with them to try to achieve this at every opportunity.