In 1941 my father, a very bright and gifted GP and psychotherapist, opened accounts at the Oxford Street branch of Bank of Scotland.  As often happens, my own decisions in life were much influenced by my father, both in terms of a career choice that included psychotherapy, and in my choice of bankers.  For many years, my experience as a customer of Bank of Scotland (BoS) was that they offered a first class service, comparable with many private banks but at High Street prices.

It was, of course, all too good to last.  Whilst I had reservations in 2001 about the proposed merger with the Halifax, in fact it represented the beginning of the end.  Even the voting for the merger was flawed.  I happened to have held BoS shares in a BoS Personal Equity Plan (PEP) and I, along with many others, had been deprived of a vote because of some bureaucratic mistake.

Although I discovered this after the vote had taken place, I registered my concerns, and found a middle ranking official attempting to brush me aside.  Only when I mooted that I might consider embarking upon legal action to block the £29bn merger of the two banks, because of voting irregularities, did I manage to get the attention of the Bank’s senior management.

The then Group Chief Executive of Bank of Scotland was Peter Burt.  Whilst pacing up and down in my kitchen, fuming and contemplating my next move, the phone rang; it was Mr Burt himself.  He seemed a very polite and thoughtful individual, and said he had heard that there was a problem.  I explained how I and many other customers holding BoS shares in a BoS PEP had been disenfranchised and that the Bank had actually profited by failing to meet its obligations.  I outlined how they must have saved money by not having to pay for the necessary paper, printing, postage and processing for the vote which failed to take place. 

Mr Burt said: ‘All true but what can we do about it?’  I suggested he should add up the total amount that the Bank had saved by dint of its mistake and give the equivalent sum to charity.  He asked, ‘Which charity?’  I said, ‘You choose.’  He suggested ‘Save The Children’, and I agreed.  Shortly afterwards I received a letter, dated 3rd September 2001, from Peter Burt informing me that he had sent a cheque for £4000 to Save the Children Fund, and so a degree of satisfaction was obtained. 

Sadly, however, this turned out to be something of a pyrrhic victory.  After the merger, the ‘Which?’ ratings for Bank of Scotland customer satisfaction, along with my personal experiences of the service, went into a nosedive from which they never recovered.  We offered both chargeable and even free advice to HBOS management but no one in authority was interested.  Ultimately, and at first a little hesitantly, I moved our principal current account to C. Hoare & Co., and have received excellent service ever since.

Of course, in being ignored by HBOS senior management, we were not alone.  They went on allegedly to provide one of the most telling accounts in the history of finance regarding failures to listen to reasonable advice.  At the Treasury Select Committee, the former head of group regulatory risk at HBOS alleged that he was sacked by the Bank’s first Chief Executive for warning that their lending policy had become dangerously overheated.  Under the second, and last, HBOS Chief Executive the Bank nearly went bankrupt, resulting in their acquisition by Lloyds TSB at the end of 2008.  Hence, Bank of Scotland, founded in 1695, one year after the Bank of England, lasted 306 years as a successful independent bank; after its merger with the Halifax, it lasted just 7.

The key points I am making are that warning signs were present but ignored.  Furthermore, such industrial catastrophes, with serious human and even societal implications, were potentially avoidable if independent, evidence based and psychologically informed Executive Coaching had been utilised.  The cost of such Executive Coaching would have been negligible and the rewards, potentially enormous.

P.S. I managed to sell all our shares in HBOS quite close to the top.  I sold, partly because the volume of my work had grown such that I no longer had the time to manage the portfolio myself.  Importantly, however, the main reason I’d bought BoS shares, apart from my father having banked with them, was that the service quality had been excellent; when that pivotal reality changed, the real reason to hold the shares also evaporated.

Bibliography:

Cameron, A. 1995, Bank of Scotland - A very singular institution. Mainstream Publishing.

BBC News Online:

Making sense of the Crosby case

The problems inside HBOS

Watchdog’s early warning for HBOS 

The Open University

Which? Magazines Ltd, Current account reviews: 2001-2010

Wikipedia