In a recent incident that sent shockwaves through the corporate world, a viral video emerged featuring a bank executive berating his team for low insurance sales. The video highlighted a disturbing reality — the existence of a poor culture of aggressive sales at the cost of consumer protection. This incident not only sheds light on the toxic work environment prevalent in some organisations but also raises serious concerns about what is acceptable as code of conduct.
And, this is not about the individual concerned, this is not about the particular financial institution, but this is about the system itself.
For those familiar with banking and financial services industry (BFSI) and or been at the receiving end of their so-called relationship banking pitch, knows the reality. That such behaviour is common and across the industry. The incident serves as a wake-up call for both the financial industry and society at large.
It exposes the dark underbelly of aggressive sales cultures that prioritise profits over consumer and stakeholder welfare. It is incumbent upon all stakeholders, including businesses, regulators, and consumers, to take a stand against such practices and demand a shift towards a culture that places customers at the centre of operations.
The harsh reality in the world of listed entities that are expected to make increasing revenues and profits QoQ is this : banks need to push non-banking products to make higher revenues. Most of the times, it is not the morality of whether to sell the product to a consumer who should not be sold it, in the first place. If only these institutions had high morals, most of these product-peddling would not happen at all.
Ask any large event management company or travel agent who work with banks and insurance companies and asset management companies. They would give you insights on how much volumes of R&R travel (global locations) that they receive from BFSI sector. This is to reward high sales performers who push those non-core products to their customers.
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Do the regulators know about these practices? Assumably, yes. Since the culture of sales-led banking has been around for quite some time. In insurance sector, the sales pitch of ‘investment products’ has consistently broken consumer trust in what should have been ‘protection’ product.
Do these bank boards know about such practices? Yes indeed. They set annual performance targets for their entities, and approve of performance pay and rewards. Boards of directors are responsible for setting the tone at the top, establishing ethical standards, and ensuring that corporate values align with the interests of stakeholders, including consumers.
Culture of sales
It is not surprising that there has been such peer pressure of high target setting. It starts from the top. Financial services entities use as much as target setting as any other consumer business. These targets are steered with regulations in mind, and not much of consumers’ financial interests at the core. A mere candid conversation with mid level executives and DSAs from BFSI would give horror stories. Here is why financial regulators should take note, if they mean consumer protection.
If harsh or foul language is unacceptable behaviour, probably at least 1/5th of the BFSI sales force would have to be let go, including senior executives. In a toxic masculine toned world, such language is generally seen as acceptable and routine in a sales-led enterprise.
At the heart of this controversy lies a corporate culture that places relentless pressure on employees to achieve sales targets, often disregarding the principles of consumer protection. Such a culture emphasises short-term gains over long-term customer relationships and undermines the trust consumers place in financial institutions. This incident serves as a stark reminder that these toxic work environments can have dire consequences, not only for employees but also for customers who rely on these institutions for their financial well-being.
Toxic sales cultures are characterised by intense competition, unrealistic targets, and a focus on maximising profits at any cost. The pressure to meet these targets can lead to unethical practices, such as mis-selling products, pressuring customers into purchasing unnecessary services, and withholding important information. Ultimately, it is the customers who suffer the consequences, as they are left vulnerable to financial exploitation and mismanagement.
There are countless market gossip about various names in the industry who use colourful language, have colourful lives that would break the morality fabric that the regulators seek (be it gender respect, loose moral behaviour, respect to consumers, fair treatment etc).
But then, it is tough to let go of those high performers despite team complaints, simply because of their dependence of such individuals who bring large revenue base. Turning a blind eye has happened and will continue to happen, unless some video like this comes out. There have been enough women who have quit their roles, simply because the culture at workplace has been toxic, and complaints only made their roles miserable.
It is time that financial regulators do mystery-audits of organisational culture across the team hierarchical. They might be in for a rude awakening. Companies must be held accountable for fostering an environment that promotes consumer-centric values and discourages harmful practices. Regular audits, employee training programs, and channels for anonymous reporting can help identify and rectify instances of misconduct.
The regulatory bodies should establish robust mechanisms to protect whistleblowers who come forward with information about misconduct or unethical practices. Such framework should be easy to do - say like sending a social media message with a hashtag defined by the regulator or to a WhatsApp number.
Whistleblower protection provisions should be strengthened to encourage employees and consumers to report wrongdoing without fear of retaliation. Anonymity and confidentiality should be guaranteed, and appropriate actions should be taken against those who engage in reprisals.
—The author, Dr. Srinath Sridharan, is a Policy Researcher & Corporate Advisor. He has also author of the book 'Time for Bharat'. The views expressed are personal.
Read his previous articles here
(Edited by : C H Unnikrishnan)
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