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Since the subprime crisis of 2008 and the resounding bankruptcy of the American investment bank Lehman Brothers, which left a lasting impression, the banking world has been experiencing a severe crisis. This mistrust has not only settled in the relationships between retail clients and banks but also between banking institutions and their own regulatory authorities.
Thus, while European legislators deemed it wise to raise the deposit protection limits from €20,000 to €100,000 to reassure savers, regulatory authorities continuously encourage banks to strengthen their capital reserves and pass stress tests.
Furthermore, Europe is attempting to establish a broader banking union that would increase solidarity among banking institutions in times of difficulty.
The survey results
A study conducted between July and October 2013 by the firm Ernst & Young shows that more than one in two customers does not have complete trust in their main bank, a trend more pronounced in Europe than in the rest of the world.
According to this study conducted in 43 countries, 44% of customers claim to have “complete trust” in their main bank, a proportion that drops to 32% for European customers.
In France, 9% of respondents claim to have very limited trust in their bank, a proportion that affects 33% of Irish customers and 17% of Spanish customers.
Thus, while 40% of customers worldwide would recommend their main bank, this figure drops to 29% in Europe.
Why such dissatisfaction?
Numerous recent cases and scandals have tarnished the public’s trust in banks.
We are, of course, thinking of the J. Kerviel case, which cost Société Générale nearly 5 billion euros following dubious positions; the B. Madoff case, sentenced to 150 years in prison for a fraud involving nearly 65 billion US dollars; the recent LIBOR manipulations carried out by major banking institutions both in the City and on Wall Street. Just look at the latest film by M. Scorsese, “The Wolf of Wall Street” featuring Leonardo DiCaprio among other stars, to realize how catastrophic the public’s image of the banking world is. In this film, the viewer discovers brokers who truly have no knowledge (nor scruples) about the financial products they offer their clients.
Without delving into these “extraordinary” cases, the survey reveals that nearly a third of clients reported an issue with their bank in the past 12 months, and among them, 33% were dissatisfied with the resolution. A third of the very dissatisfied clients declared their intention to close all or part of their accounts.
Specific complaints in private banking
It is no secret that private bankers, those assigned to the discretionary management of securities portfolios, receive specific instructions from their employers to sell financial products developed by their banks. They even receive specific commissions (bonuses) if they succeed in selling these products to their clients.
Is it necessary to specify whether these products are good or bad (e.g., a bank offering you a life insurance product developed in-house)? Needless to say, there is strong pressure on small clients to buy products on the condition that they also subscribe to some “in-house” products. The banker will tell you that these are excellent products and that the management cost is reduced to zero because they are “in-house” products.
We have only one piece of advice for you: resist and compare! Only buy financial products that you are convinced meet your desires and your investor profile. Follow through with your ideas. Also compare with products from other banks.
Does your banker not want to follow your desires? Change banks. You will see that suddenly, they will view things differently.
How to choose your bank?
Our website is full of smart advice to support all your life projects, and choosing a trustworthy banker is certainly part of that. So take the time to read our advice article on choosing the right bank.
CPE is not a bank but a credit intermediary
Our company is not a bank but a credit intermediary.
Our mission is to help you obtain a personal loan or a mortgage from a banking institution.
To do this, we help you prepare your file to increase your chances of obtaining the credit you want.
Why not contact the bank directly?
There are several reasons for this:
- Banks delegate their retail activity to credit intermediaries like CPE;
- Banks only manage professional or very large credit requests;
- A credit intermediary ensures the diversity and competition that a bank cannot offer you;
- A credit intermediary can get you a decision within 48 hours, which will never happen with your banker.