Listening to our customers

 

Every month we contact 75,000 customers as part of a systematic customer feedback process. We listen carefully to what our customers tell us, both good and bad, and use this to make changes where necessary. Often, we learn about the small things that cause frustration to customers. By listening to our customers, we can quickly put things right.

 

In 2010, we launched a campaign to identify and remove any policies and processes that are not helpful to our customers. As part of the campaign we ask customer-facing colleagues in our Retail business to come forward with any policies and processes that cause irritation to our customers. Colleagues can highlight these in a dedicated section of our Groupwide intranet site. Since the campaign was launched in December, 67 policies have been removed, improved, or are in the process of being implemented.

 

Some examples of the improvements we have made through this campaign include:

 

  • Fraud victims’ accounts are now returned to normal within 24 hours, including refunds for any fees and charges incurred as a result of the fraud. This will benefit 200,000 customers a year.
  • Our credit limit reduction letters for credit cards will now state the reason why we are reducing the credit limit. This will improve transparency for 85,000 customers a month.
  • Lloyds TSB customers can now tell us when they are going abroad so that we do not stop any debit card transactions abroad during this period of time. This will benefit 350,000 customers a year.

 

Addressing customers’ complaints

 

The vast majority of our customers are happy with the service we provide. When we do receive complaints, we take these very seriously, and ensure that they are dealt with quickly, fairly and consistently.

 

Since August 2010 banks are required to report their full complaints data publicly under new FSA rules. We welcome this initiative as it greatly increases industry-wide transparency on customer complaints for all stakeholders.

 

In the second half of 2010 the number of complaints we received increased by 14 per cent from 288,717 to 329,761. This increase is due to a rise in Payment Protection Insurance (PPI) complaints. When PPI complaints are excluded from the total number, we actually achieved a reduction of 12 per cent in banking complaints. This positive trend is as a result of the steps we are taking to improve our complaint handling processes as well as improvements to products and services.

 

We have given our 40,000 customer-facing and call-centre employees extra, in-depth training on handling of customer complaints. We established a new ‘Phone a Friend’ complaints resolution team in October 2010 to support customer-facing employees with immediate, practical advice. We now resolve 90 per cent of complaints straight away in a branch or over the phone. For the remaining 10 per cent of complaints, customers are given the name of an individual on the Phone a Friend team. Customers are also provided with an estimate of how long the complaint will take to resolve and when to expect an update. Overall, we improved our customers’ view of complaint handling by 10 points in 2010.

 

However, we know we have to work to reduce the number of complaints we receive in the first place if we are to achieve our goal of becoming the best bank for our customers. We have publicly committed to a target of reducing the number of complaints that are not resolved within the first 48 hours by 20 per cent in the first half of 2011.

 

70 senior leaders in our retail bank are spending one day per month working in complaint handling – dealing with complaints and experiencing our customers’ concerns first hand. This will help us to more quickly identify and fix the things that cause complaints.

 

Payment protection insurance

 

Payment protection insurance (PPI) insures customers against an inability to make repayments on credit they have taken out – such as loans, mortgages and credit cards – due to accident, illness or unemployment. Originally, PPI was sold at the point of sale of a credit product. Our PPI products were good quality – our Lloyds TSB product was awarded five stars (excellent) by independent assessor, Defaqto. However, we do acknowledge that in some cases the sale of PPI did not meet our high standards.

 

Last year, the FSA announced new rules about how to handle PPI complaints about mis-selling which they wanted applied retrospectively to past sales. This was challenged by the British Bankers’ Association (BBA) and subsequently a judicial review into complaints handling was launched in October 2010 with the outcome known in April 2011. During this time, complaint volumes about PPI increased particularly as Claims Management Companies encouraged consumers to query their PPI policies. Whilst the judicial review was being heard, complaints which may have been affected by the outcome of the judicial review were put on hold.

 

The High Court ruled against the BBA on the 20 April 2011. Following this announcement and subsequent discussions with the FSA and the Financial Services Ombudsman, we decided to end our participation in the BBA’s judicial review. We were the first of the major banks in the UK to make such an announcement.

 

We recognised that customers were facing long delays in respect of their PPI sales-related complaints during the BBA’s judicial review. We wanted to do the right thing by our customers and on 5 May 2011, decided to implement the FSA’s policy statement and new rules in full. This decision is sensible, prudent and the right thing to do. Our customers are at the heart of our business. This decision is good for customers as it brings clarity to those that are affected. We have set aside £3.2 billion for the potential costs of redressing customers’ PPI sales-related complaints. We are proactively contacting affected customers and are dealing with queries and complaints as quickly as possible.

 

Innovative products and services

 

We work hard to introduce new and innovative products that respond to customers’ evolving needs, underlining our commitment to building long-term relationships with our customers.

 

In 2010, Halifax launched the Cash ISA Promise, an industry-leading move to help drive a fairer deal for customers when transferring their cash ISA. The Cash ISA Promise enables all customers transferring their existing cash ISA to Halifax, to earn interest from the first day that we receive their completed transfer form. It was launched in response to industry-wide concerns that ISA transfers take too long, costing consumers millions in lost interest. Lloyds TSB and Bank of Scotland have also committed to paying customers interest upon receipt of their ISA applications. Since the Cash ISA Promise was launched, we have increased the ISA pots of UK savers by an extra £7.5 million in interest.

 

Halifax also launched a ‘No Fees’ First Time Buyer Mortgage early in 2011. The mortgage offers Halifax current account customers a 90 per cent loan-to-value mortgage at a two year fixed-rate of 5.79 per cent. It has been specifically designed to help first-time buyers by paying the fees on their mortgage.

 

The Halifax Clarity credit card, launched in July 2010, leads the market on simplicity and value. It is a back to basics credit card that charges one flat rate of interest – below the market average – across all transactions. It does not charge foreign exchange fees on purchases or fees for cash withdrawals from overseas ATMs, considerably cutting the cost of travel money for holidaymakers. The card was launched to counter confusion around fees and spending on cards.

 

Lloyds TSB’s unique ‘Lend a Hand’ mortgage enables buyers to take out a mortgage with a deposit of as little as 5 per cent at an equivalent rate to borrowers with a significantly bigger deposit. The mortgage is linked to the savings of a helper, such as a family member, to ‘top up’ the deposit to 25 per cent of a property’s value.

 

Originally launched for first-time buyers, in 2010 ‘Lend a Hand’ was extended to all home movers. Most lenders do not offer deals for customers moving house unless they have a deposit of at least 10 per cent. We extended this product to home-movers in recognition of the challenges faced by ‘Second Steppers’ of securing an adequate deposit. Second Steppers are those still living in their first homes, but looking to take their next step up the housing ladder. According to research conducted by Lloyds TSB, they are the segment of the market most likely to have their equity levels affected by a reduction in house prices. They typically bought their homes at the height of the market, and, due to market conditions, have not benefited from any increase in their equity.

 

Lloyds has also launched a new Equity Support Scheme which enables existing customers with low or negative levels of equity to move home. This is a flexible solution that enables customers to move location to a property of the same value, buy a larger property or downsize, depending on their needs, enabling them, for example, to move for a job or start a family.

 

Increasing transparency

 

We took a number of industry-leading steps in 2010 to improve transparency for savers. Lloyds TSB and Halifax have taken steps to:

 

  • Ensure current interest rate information is clearly visible online and on paper statements.
  • Ensure that all of our savings accounts are open to both new and existing customers.
  • Ensure that an online calculator is available to help customers work out exactly how much interest they can earn in different accounts.

 

During 2011, all of the Group’s main savings brands, including Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Birmingham Midshires will publish savings interest rates on customer statements.

 

We are also investing in tools to help customers have greater control of their money. Lloyds TSB’s cutting edge online ‘Money Manager’ service helps customers track spending patterns and manage their finances. It provides a combined view of spending across Lloyds TSB personal current accounts and credit cards, and can break down customers’ expenditure under categories such as bills and shopping, helping them to budget.

 

Internet and mobile banking

 

Over 7 million of our customers actively use online banking. Our Lloyds TSB online banking site won first place in the 2010 Experian Hitwise UK Online Performance Awards for Banks and Financial Institutions. Three other Lloyds Banking Group sites also featured in the top ten.

 

We are continuing to invest to improve internet and mobile banking services. In 2010, we introduced an online ISA applications process. We enhanced the ‘advice and guidance’ section on the Lloyds TSB website to include budgeting calculators and also became the first major UK bank to communicate with customers on Twitter and YouTube.

 

In 2008, Lloyds TSB was the first bank to enable customers to transfer money between accounts using their mobile phones, and request and receive an up-to-date balance on demand via their mobiles. In response to increased demand from customers for alternative banking options, in 2010 we made our mobile banking service free to use for all Lloyds TSB customers. We also improved our mobile banking application process to make it quicker and easier for customers to sign up. 1.2 million customers currently use mobile text alerts to help them manage their money.