The John Lewis of banking? TSB says Yes

Can the TSB claim to be the John Lewis of Banking?  Following my blog post last week questioning that claim, here is the detailed response from Anthony Hus, Media Relations (Corporate) Manager at the TSB.

I read with interest your recent blog titled “The ‘John Lewis’ of banking? Not with this level of bonus” and thought you might like some further background on TSB’s new reward strategy and how we see this as a step forward for the banking industry, as well as how it compares to the John Lewis Partnership model.

In developing the new reward policy, TSB has reviewed the remuneration policies of other banks and has also taken inspiration from a range of retail businesses, most notably the John Lewis Partnership – as you mention in your blog.  The Bank has been keen to shift its focus from product sales towards customer service and we believe that one of the key ways to encourage consistently outstanding customer service is to make every employee a ‘partner’ in the business.

In comparison to the John Lewis Partnership model (where the multiple is up to 75 times the average basic pay of non-management partners), Paul Pester’s multiple is 36 times the current average pay of non-managerial TSB employees, while his maximum potential pay will be no higher than 65 times.

We are confident that the policy we are implementing is materially different to the other banks on the high street.  In particular, the strong weighting towards fixed over variable pay, and the requirement to hold shares awarded under the “TSB Partners” share offer in order to be eligible for performance-related rewards are innovative and (we believe) different to TSB’s peers.  And we are in fact the first major bank to voluntarily adopt the 1:1 ratio.  Furthermore, unlike competitors’ bonus schemes, the deferred elements of the TSB Award are tested each year before they’re released.

We think it’s important the senior members of staff are paid in both fixed and variable pay – an approach endorsed by the PRA. Indeed, it’s a requirement to have a significant proportion of pay paid in variable pay.  This is a requirement of all financial services organisations (and not retailers, as an example).

Finally, I’d just like to add that at TSB we aspire to be different and are committed to bringing more competition to UK banking.  For example:

o   Our Truth and Banking hub and animations show we are willing to be transparent to customers – and this will continue to be developed over time.

o   When TSB had a major IT outage in January 2014, Paul Pester used social media to update customers directly – a rather unusual move in the banking industry.  If you are unfamiliar with this incident, here’s some information http://insigniacomms.com/tsb-ceo-demonstrates-value-leadership-crisis-management/.

o   Our first fully new product since launch was the Classic Plus bank account.  This is different in many ways including: no introductory bonus (so not pre-determined to drop after 12 months); more accessible to consumers as it requires a lower minimum monthly credit; no need to switch accounts to get the full benefits.

o   We are the first and only national bank to replace high-rate 0845 numbers with local rate 0345 numbers in full – a move supporting (and supported by) Which? http://conversation.which.co.uk/money/tsb-costly-calls-03-0845-win-paul-pester/.

I hope that all makes sense but if you have any questions on the above, or indeed about TSB in general, then we would be happy to speak with you.

Thanks,

P.S. One further point to note is the number of TSB branches.  Currently we have 631 and, as part of our strategy for growth, the Bank will embark on a targeted programme of new branch openings, which will increase the proportion of Britain’s population within two miles of a TSB branch.