The former chairman of Adam and Company has accused the current management of causing “dismay” and “anger” among customers of the genteel Edinburgh-based private bank, after a management clear-out and abrupt changes to customer services, including a new system of charges.
Ray Entwistle, who resigned from the post last December, said: “There’s a huge amount of client dismay at what’s happening and there’s anger as well.”
But Jo Thorne, a spokeswoman for RBS Wealth, of which Adam and Company is a part, said that while customer complaints were “inevitable”, the volume was lower than expected. “The number of account closures as a result of the tariff changes, while still extremely early, is very low and considerably under the numbers anticipated,” she said. The row, at odds with the New Town elegance of Adam’s luxuriously-appointed townhouse in Charlotte Square, follows changes forced through by Adam and Company’s interim managing director Kerry Falconer.
Falconer, also known by her maiden name of McGuire and described by Entwhistle as “very capable”, was a protégée of the disgraced RBS chief executive Sir Fred Goodwin. Former colleagues have told the Sunday Herald she shares his “abrasive” management style.
Last week, the bank confirmed it is shedding 130 of Adam’s 300 Edinburgh-based staff, or 43%, with roles in finance, treasury, dealing, credit risk, IT, investment operations and client liaison being transferred to other parts of the RBS Wealth group in London and Bristol. This followed an announcement from RBS in June that it was axeing 500 UK jobs between Adam and Company and sister wealth manager Coutts & Co, claiming that a new IT platform rendered the jobs obsolete.
Last month the bank introduced a new charging regime that will see anyone with assets of less than £250,000 with the bank having to pay annual fees of £480 to maintain an Adam and Company current account.
Falconer was promoted to Adam and Company’s interim managing director earlier this month, following the shock resignation of predecessor David Cathie.
Kerry Falconer was ‘plucked from obscurity’ to run Adam and Company
Falconer was Goodwin’s “executive assistant” for five years. Bank insiders say he plucked her out of relative obscurity at RBS’s treasury division at South Gyle in 2002 and installed her at Adam and Company in February 2008 with a mission to integrate the bank more closely with the rest of RBS group. Adam and Company, founded by Edinburgh business people including Sir Iain Noble in 1983, was acquired for £10.3 million by RBS in 1993, but allowed to retain autonomy until the near-collapse of its parent institution in October 2008.
A former senior member of the management team said: “Ever since she arrived at Adam and Company, Kerry’s agenda has been to bring greater centralised control.
“The Adam and Company which customers thought they were putting their money into – a semi-autonomous wealth management firm – has largely ceased to exist. The fences have been trampled down, and the barbarian hordes are trampling across the lawn, led by Kerry Falconer.
“She comes from a commercial banking background as opposed to a private banking one and is there to carry out orders on behalf of a large commercial bank which is desperate to right its balance sheet.”
As head of banking, Falconer last month signed a letter warning customers that unless they increased savings, deposits or loans with the bank to £250,000 they would have to start paying annual fees of £480 to have a current account with the bank. Customers were given until April 30 next year to comply.
The letter made clear that, despite the increased charges, services including twice monthly bank statements and the Adam and Company high-interest cheque account were being axed.
Entwistle said: “There’s a huge amount of client dismay at what’s happening there and there’s anger as well. I spent 25 years at Adam and I really hope it can come through this. I hope that the highly capable staff who are still with Adam and Company have a future, and that they find it possible to rebuild goodwill and confidence. I also hope the IT platform really delivers everything they say it’s going to deliver.”
Entwistle added: “Kerry is obviously a very capable lady. She’s got a very, very difficult job to do.”
Adam and Company has suffered a string of departures from its investment management arm since Falconer’s arrival. A group of three senior executives led by Gareth Howlett, who tried to orchestrate a management buyout of Adam’s investment business, were cold- shouldered by RBS’s former chairman of wealth management Gordon Pell and left to open an Edinburgh office for rival wealth manager Brooks Macdonald.
In the past six months about 20 people have left Adam and Company’s investment administration department. RBS wealth has also suffered a mass exodus in Asia. In August, Hanspeter Brunner, who earned more than £850,000 a year as head of RBS Wealth International, quit and took 70 of the bank’s Singapore-based wealth managers with him. The team decamped to the regional arms of Swiss private bank BSI (Banca della Svizzera Italiana), a move that prompted law suits from RBS.
Writing in Chartered Banker, Kerry Falconer said: “If you’ve ever tried to grab a cab in the City and they know you’re a banker, it’s not a very pleasant experience … [but] at the end of the day, banks are commercial organisations, answerable to their shareholders.”
In a statement RBS said: “Earlier this year we announced we would be cutting 500 roles in our wealth division and that we would communicate directly with staff at affected locations. The consultations with staff in Adam and Company are an ongoing part of this process. We will do all we can to support our staff, offer redeployment opportunities wherever possible and keep compulsory redundancies to an absolute minimum.”
This article was the business “splash” in the Sunday Herald on 19 September 2010