Raising the standard of bank CSR reporting

With financial support from the Citi Foundation, the UK Centre for Responsible Credit together with the institute for financial services (iff) conducted a study of CSR reports issued by twelve major retail banking operations in the UK, France, Spain and Germany (HSBC, Santander, Credit Agricole, Barclays, BBVA, Royal Bank of Scotland, Lloyds Banking Group, BNP Paribas, Commerzbank, Nationwide Building Society, La Caixa, and Co-operative Financial Services).

The study considered the extent to which providers were responding to consumer agency concerns in respect of four main issues - responsible lending, financial inclusion, financial education, and the need to improve assistance to people in debt.

We found that:

• The absence of a single, consistently, applied CSR reporting framework covering the four issues of concern leads to a wide variation in the way in which performance is reported and makes comparison between providers difficult.
   
• There remain significant questions with regard to the reliability of statements made in the CSR reports with a lack of transparency and consistency in the mechanisms used to quality assure statements and the information presented.
   
• Evidence of effective engagement with consumer agencies in respect of the design of retail financial products, and the development of internal policies and procedures, for example in respect of responsible lending policy or debt recovery practices, is very weak although there are examples of positive engagement at the industry wide level.
   
• Prior initiatives to develop sector specific guidance for CSR reporting have not sufficiently engaged expert consumer groups or have failed to win the support of industry wide associations.

The report pulls together existing best practice into a basket of indicators which it recommends providers should use in future reports. These include the amount of funding provided to debt advice agencies and credit unions as a proportion of retail banking turnover, and indicators showing the extent of mortgage repossession activity benchmarked against the industry average.

In the UK, the Centre calls for the Department for Business, Innovation and Skills to convene a stakeholder group to discuss the findings and improve the use of the suggested indicators in future reports. The report also recommends that the European Commission establish a group to take forward the further development of a common reporting framework.

The full report (‘Held to account: a review of Corporate Social Responsibility in retail banking from the consumer perspective’) is available here.