The dislcosures made to the BBC and subsequently to Andrew George MP and journalists at a meeting at the House Commons revealed that the Clydesdale, Yorkshire and Northern Banks operated a structured, detailed and auditable system for costing, tracking and refining their costs of conducting various operation within the bank including the processing of delinquent accounts.
The system, which was apparently introduced about 2002 was called CYNthesys - Clydesdale Yorkshire Northern the system.
With hindsight, CYNthesys is straightforward and obvious.
It amounts merely to deconstructing a manually conducted process within an organisation into its constituent parts and then allocating a code and a time in seconds for each part.
- A100 - switch on computer - 10 standard seconds
- A101 - retrieve customer record - 4 standard seconds
- A102 - data entry - 3 key strokes - 4 standard seconds
- A103 - retrieve sub-record - 2 standard seconds
- A104 - data entry - 12 keystrokes - 6 standard seconds
Andrew George and the press were shown a system containing almost 300 coded operations with their ideal timings next to them.
It then becomes quite easy for a time & motion analyst to observe any particular operation - such as bouncing a direct debit, to recognise which of the CYNthesys elements are being used, to note the codes of those elements down, and to find out the ideal timings for each element.
A simple piece of maths then adds up all the timings to give the answer that bouncing a direct debit should take XXX seconds.
The CYNthesys codes were actually contained in hard-copy form but an ideal way of using them would be to render them into a spreadsheet which would then do the calculations very quickly and automatically.
Andrew George MP did inspect such a spreadsheet.
Once a process has been timed, 12.83% is added to allow for toilet breaks, illness, holidays etc - so one can see that some of the overheads are already costed into the system.
The fact that the system is called CYNthesys shows clearly that it is not only in use by the Yorkshire Bank but also by the Clydesdale and (until it was sold off in 2004) by the Northern Bank as well.
The Northern Bank was sold off shortly after the completion of an Irish High Court report which identified serious improprieties relating to overcharging, tax avoidance and - penalty charging - by the Northern's siamese twin - The National Irish Bank (also part of the CYN group owned by the National Australia Group.) National Irish Bank - Wikipedia, the free encyclopedia
- It might be said that Clydesdale and Yorkshire banks have already been close to scandal - despite not having been involved in it.
- They are part of the National Australia Group of banks. The Northern Bank was also part of the same Group until it was sold off in 2004 to the Danes.
- The Northern Bank was one of the main banks in Ireland. In the Irish Republic the Northern Bank traded as the National Irish Bank but it shared systems and management with the Northern.
- In 1998 the High Court of Ireland ordered an investigation into improper practices within the National Irish Bank.
- The High Court Inspectors reported in 2004.
- They found serious overcharging and tax evasion.
- Much of the overcharging related to the bank's penalty charge regime which at that time was operated subjectively and arbitrarily.
- The National Irish Bank was fined, there were disqualifications and (I believe) executive resignations. £millions were repaid to customers.
- No comment was ever made as to the practices of other parts of the National Australia Group: - Northern, Clydesdale and Yorkshire and of course there is no reason to suggest that they were run other than entirely properly.
- CYNthesys was implemented in 2002; 4 years after the beginning of the High Court investigation and two years before the report.
- We can only speculate as to how the penalty regimes of these banks was conducted before CYNthesys. Certainly, they did apply high level penalties to their customers' delinquent accounts.
- The National Irish Bank and the Northern Bank were sold off shortly after the publication of the High Court report.
- The National Australia Group became aware of the likely findings of the High Court inspectors
- Did they have a similar lack of systematic and auditable system of charging in all of their UK banks.
- Did they then commission external consultants to remedy this problem with a properly structured and trackable system
- CYNthesys was implemented across all of their UK subsidiaries
- Once the High Court Inspectors report was published it then became acceptable to divest themselves of the Northern/NI bank stigma by selling it off
The level of unlawful penalties is generally in the same order before and after CYNthesys
This is part of a paper presented to Andrew George MP and journalists at the House of Commons on 29th March 2007.
I understand that Andrew George is taking the matter up with the DTI
The Yorkshire Bank has commented that our interpretation of the CYNthesys figures is misleading and that for instance there may sometimes be need for senior managers to operate the system which would lead to higher costs.
We accept that this may indeed be true.
However we merely feel that there are some reasonable grounds for confusion here and that it would not be unreasonable for the Bank now to be fully transparent and to give a full explanation.