The real problem with RBS and its £400 a day letter stuffers

Executives are paid scandalous amounts of money to ensure RBS runs smoothly and doesn’t have to resort to paying over the odds for people to handle tasks like the PPI review

Fancy getting £400 a day to stuff letters? RBS is where you go (PA)

Poor Royal Bank of Scotland (RBS). Just when it looked like things might be going quiet(ish) for a spell, a report has emerged from the Press Association of the majority taxpayer-owned bank paying people more than £400 a day to stuff envelopes.

That represents something like the equivalent of a six-figure annual salary for sending out payment protection insurance (PPI) review letters. Heck, does anyone know where I can get an application form?

Joking aside, could such largesse for such a relatively mundane task ever be justified?

This may not be a popular view, but it is possible to see a rationale for it. Just barely.

Sorting out the PPI scandal is a major exercise, involving hundreds of thousands of cases, and more admin than would be required to run some small countries.

The Financial Conduct Authority is understandably keen to make sure banks get it done in a timely fashion before drawing a line under the thing (which it has agreed to do under pressure from both the banks and the government).

To that end, it has the power to impose heavy penalties on those that don’t shape up. These are usually accompanied by truckloads of bad publicity.

That being the case, you can see how RBS might have got to this point. The motivation becomes “get it done by any means necessary” even if that means calling on highly paid, highly skilled people to stuff envelopes.

Here’s the problem with that line of reasoning: £400 a day is so much chump change when set against the sort of money RBS pays to its top executives.

It does this because they’re all supposed to be superheroes. It is held that they are the management equivalent of Superman, Batman and Wonder Woman all rolled into one, with such rare skills that RBS (and thus the taxpayer) has no choice but to pay what it takes.

That means high six or even seven figure salaries, bonuses, long-term incentive schemes and more sweeties than you’ll find in Willy Wonka’s chocolate factory.

So you’d think banks like RBS would run super-smoothly and not have to resort to… right… paying £400 a day to people simply to stuff envelopes.

I haven’t even mentioned the string of scandals RBS has become embroiled in or the controversy over it cutting branches in rural areas, or, well, take your pick.

The problem with RBS really isn’t its low-six-figure letter stuffers. That’s just a symptom. The problem is the high six and seven figure executive team led by CEO Ross McEwan at the top.

This episode has once again drawn attention to that.