A REVIEW OF behaviour and culture in Ireland’s five pillar banks has found lenders still have “a distance to travel” before they can be considered truly customer-focused.

The review which was conducted by the Central Bank in collaboration with the Dutch Central Bank assessed the organisational culture of AIB Group, Bank of Ireland Group, Permanent TSB, Ulster Bank and KBC Bank Ireland.

As part of the process, the team conducted hundreds of surveys and more than 15 hours of interviews in each bank. They also reviewed business strategies, organisations structures and role profiles.

Some were found to be further advanced in their move towards a more consumer-focused culture, but there were some trends that were across the board, like a lack of collective understanding of what consumer focus actually means.

The review team focused primarily on the executive leadership team, “due to the importance of its members in driving effective cultures”. The report notes several executive committees display ‘firefighting behaviour’, focusing on urgent and short-term issues.

This may be a remnant of a crisis-era mindset which persists because of the necessity to solve a multitude of legacy and regulatory issues.

Another recurring theme was the need to increase the empowerment and decision-making ability of senior staff.

Reviews also identified an over-optimism among lenders about the successful transition to a consumer-focused culture – in some cases they did not anticipate the amount of work or time it would take.

Strategies harmful to consumers can often emerge simply because the impact on the consumer was not openly discussed beforehand, according to the report.

Although the final report published by the Central Bank today does not provide information on individual lenders, each of the banks has been sent individualised reviews pinpointing areas of improvement.

These banks will be required to deliver action plans to address the specific risks identified.

The Central Bank has also recommended that legislation be introduced to facilitate the introduction of an individual accountability framework which would set conduct standards for staff and ensure clear lines of accountability.

Derville Rowland, director general financial conduct for the Central Bank said culture is “set from the top down” and so it is a matter for boards and senior management in the first instance to set an effective culture that puts customers first.

“Banks still have a distance to go to live up to their slogans of putting customers first,” she said.

Effective organisational culture builds on shared purpose and standards such as professionalism, honesty, integrity and accountability to deliver fair outcomes that have the interests of consumers at heart. The Central Bank expects to see such standards and values embedded in all the firms we regulate.

Rowland said the regulator will be monitoring the appropriateness and implementation of lender’s programmes.

“There is no magic wand to solve these issues all at once. Cultural issues take time to work through, so this will be very much ongoing and continuous multi-year supervisory work rather than a once-off, immediate solution.”