CRITICISM, mistrust and anger about the banking industry is building up as more and more information and issues come to light.
The latest report from the Financial Conduct Authority has revealed that “free” banking doesn’t exist as banks profit from 90 per cent of customers through high overdraft rates and low interest payments on savings.
Savings interest in particular can be up to 50 per cent lower than other providers. There’s also a focus on selling “products” such as loans, credit cards and mortgages, rather than customer care.
Ten per cent of customers who are deemed “vulnerable” because they exist on overdrafts or because they naively leave large funds languishing in bank accounts earning little or no interest, account for up to half of banking profits.
Finance deals are so complex that the average person can’t ensure they are entering into an agreement with a bank that works in their best interests. Much of it (and the FCA didn’t say this bit) seems like a large con.
There are plenty of other issues. The BBC’s Rip Off Britain highlighted the case of a student whose name and ID had been used by a fraudster to open a Barclay’s account and extract money.
When they contacted her, she told them she didn’t have an account with them. Nonetheless, they logged her as the fraudster, which meant all other banks were informed and all her own genuine accounts were closed down, giving her no access to money.
Eventually, after months of anxiety and a detrimental effect on her studies, Barclays admitted they’d got it wrong and her accounts were reactivated. But the Financial Ombudsman couldn’t do anything on her behalf – because they could only act on the basis of how Barclays handled their own customers. She had never been a Barclay’s customer.
Bank closures are infuriating the UK, particularly folk in Barra in the Outer Hebrides. Their RBS branch is on the closure list but has been reprieved until the end of the year.
The bank did have its mobile van “branch” on the island too but that has now been temporarily axed, allegedly because of “low use” (which they always claim to justify closures but makes no sense while the bricks-and-mortar branch still exists), ferry capacity can’t cope with their van (really?), and because of islander “hostility” towards its staff.
Now that’s a joke. Who in the UK – apart from primary school kids, the sadly demented or tragically insane (and bankers) – doesn’t feel “hostile” towards banks? The frontline staff aren’t to blame of course, but they are the only contact to which frustrated and financially thwarted customers have access.
Theresa May has always insisted banks are free to make their own commercial decisions, despite the fact that they are ripping off customers by imposing terrible interest rates on savings and overdrafts. They are directly affecting citizens’ incomes, spending ability and thus the whole economy.
Control on banking is a vast challenge. Countries, continents and blocs such as the EU would have to work together to impose rules and standards preventing customer exploitation. Banks, like any other business, have to make money but as a result of their own work and service – and not as much as they currently do by skimming it from clients to pay their fat cat brotherhood.
A new alternative type of banking? That might be the answer.
Teaching himself how to boil an egg
THIS week’s domestic snippet: Himself attempts to boil an egg. Slices off the top to find it raw inside. “Can’t even boil an egg?” I ask.
His reply: “Of course I know how to boil an egg – I just don’t know for how long!”