Royal Bank of Scotland vows to save the humble cheque

Devotees of the old-fashioned and under-threat chequebook have a powerful ally. Brian Hartzer, the American parachuted in to run Royal Bank of Scotland's high-street network, is pledging to resist the abolition of the cheque even though most of the rest of the banking industry wants to consign it to the scrapheap. Breaking ranks with his competitors, Hartzer told the Observer that alternatives to the cheque were not being designed quickly enough, leaving small businesses and charities without a much-needed form of finance. The gregarious 44-year-old, who earned his spurs as a banker in Australia, wants to relieve the worries of those two key customers even as the industry prepares to phase out cheques by 2018. Arriving a few moments after his Starbucks coffee is delivered by an RBS waiter on a silver tray, Hartzer explains that his aim is to restore customers' confidence in the wake of the 2008 crisis. "We are trying to rebuild the relationship customers had with banks. It occurred to me this [cheques] is an issue that shouldn't be an issue," he says. A survey by Saga found that 76% of over-50s disagreed with the industry's attempts to get rid of cheques, while the Treasury select committee is reopening its inquiry into the matter. "RBS NatWest is not going to get rid of cheques unless there is a viable alternative and unless customers are ready for it," Hartzer says. A small promise, perhaps, given the scale of the challenges faced by a bank that was slapped with an £2.8m fine by the Financial Services Authority for the way it handled customer complaints at the start of the year and, like rivals, is ploughing through compensation claims from customers mis-sold payment protection insurance (PPI). Even as he was transferred from Melbourne, where he was a senior executive at ANZ bank, to join RBS, Hartzer says he knew PPI was a "big issue". "From my standpoint, I'm pleased it's behind us so there is less distraction from the past, and focus on the future is a good thing," he says. Bonuses handed out in the past to bankers involved in overseeing the mis-selling may now be at risk, he says. "The remuneration committee looks at clawback. I'm not involved in that committee, but I suspect this is an issue that is a classic issue to look at." His face creases with laughter when asked about the decision by rival Lloyds Banking Group to break ranks with the industry and make a £3.2bn provision for mis-selling claims at the start of the month. The rest of the industry then dropped a long-running legal action against the Financial Services Authority, which is imposing retrospective changes to rules on PPI sales. He sees the bright side. "I was disappointed in the way it came out because there was an important point of principle," he says. "It was little bit of a surprise, but if anyone thinks there is a cabal of banks talking to each other, then there's proof that there isn't." A student of history, Hartzer says: "I'm a big fan of the phrase: 'History doesn't repeat itself, but it does rhyme'." Hence the customer charter introduced in March 2010 as part of RBS NatWest's bid to become "Britain's most helpful bank". The first audit showed that the bank had failed on five promises, and he admits there is a lot more to do. He has set about changing the operation of the branch network. Jobs have been cut – 690 went last week – but more emphasis has been put on frontline services, he says: "The biggest change for me philosophically has been to ensure the centre is there to support the front line. I've tried to ban the use of the word 'head office'. We talk about the centre." A roadshow was taken to 3,000 managers a year ago to send a message that sales targets would be replaced by a focus on customer service. Without specifically mentioning the hiring of ex-Asda marketing man Andy Hornby to run the Halifax branches at the start of the last decade, Hartzer says: "What fundamentally went wrong was buying into the belief that banking was retailing. That whole notion was deeply misguided… Banking is not retailing. In a bank, 95% of what goes on is service. That is quite a change in philosophy."