Banks must be forced to serve customers, not just make massive profits from them

Simon Read

money blog city pic 300x225 Banks must be forced to serve customers, not just make massive profits from themTens of million bank customers appear to know something that Chancellor George Osborne doesn’t. It’s that we have no confidence left in our banking system and there urgently needs to be change before we can start trusting Britain’s bankers again.

MPs are the latest to tell the Chancellor that his attempts to reform banks are woeful, ahead of a debate on the banking reform bill in Parliament today. In a damning report published this morning, the Parliamentary Commission on Banking Standards calls Osborne’s plan “wholly inadequate” and that “the Government’s arguments are insubstantial”.

The Commission repeated its call for watchdogs be handed reserve powers to break up the entire British banking industry. That may sound unnecessarily drastic, but let’s bear in mind that banks’ action came close to bringing about the collapse of the whole economy.

Osborne has been talking big about his proposed actions. He has said he will introduce powers to “electrify the ring-fence” if lenders fail to keep high street branch operations separate from the dealing floor.

“2013 is the year when we reset our banking system. So the banks work for their customers and not the other way round,” Osborne said in a speech outlining the banking reform bill last month.

The Chancellor believes handing regulators powers to split the entire industry is unnecessary.

But Andrew Tyrie, chairman of the Parliamentary Commission on Banking Standards said Osborne must go further and introduce a “second reserve power for full, industry-wide separation” if the ring-fence is breached. In other words, a sensible protective measure.

Beyond the political squabbling is a decision that will affect all of us. Banks must be made to put their customers’ needs first, rather than seeing them simply as clients to flog expensive insurance to.

With that in mind, it’s interesting to examine research published today by ethical bank Triodos.

It shows that 16.5m people feel only negative or indifferent feelings towards their bank, with many feeling  angry or ashamed about their bank.

When asked to describe their bank, 16 per cent of banking customers used the word ‘greedy’, while a further 6 per cent used ‘unethical’.

When it comes to regaining trust, banks need to offer fairer charges and decent products and be totally transparent about fees and the way they profit from us all. Perhaps the most damning statistic in the Triodos research is that fact that just 7 per cent of banking customers think their bank is transparent.

That shows just how far banks need to go to start restoring trust. And it should send a message to Osborne that his banking reforms are still falling far short of being adequate.

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  • Maradona_Hand

    I don’t want them to serve me at all. I resent being forced to have a bank account in order to be paid my salary.

  • Simon_99

    It’s not that strange. If you’re a small bank with limited brand recognition you have to offer better rates to attract customers and grow the business. They do this by cutting their margin to the bone or, in some cases, making a loss. Not sustainable in the long run. It’s also a bit easier for small banks to cherry pick the best customers (ie with large deposits or good credit scores). If you have 20m customers, probably only the top 20% make you any money and the rest you’d dearly like to get rid of.

  • Simon_99

    If you have a pension then you almost certainly own shares in Lloyds Banking Group

  • Simon_99

    Banks aren’t public utilities and are perfectly entitled to charge for the services they provide. If you don’t want to pay there are plenty of other banks you can turn to, which you have done. You say it’s a “privilege” to look after your money and in doing so make the common mistake of thinking, without any evidence, that you are actually a “good” customer. Have you ever considered that you might in fact be a very bad customer (from the bank’s perspective), costing them a lot of money, and they are glad to see the back of you? The only reason I can think of for charging you for keeping money in a deposit account is if you were abusing the T&Cs somehow (e.g. using it as a current account by making lots of transactions), or if you are a business customer using a personal account for business purposes.

  • Simon_99

    Your way of thinking is wrong. By putting money into a savings account you are literally lending the bank money. You have zero risk of losing your money if the bank goes bust so long as you are under the FSCS limit, and the value of your savings is unaffected by whether the bank does well or badly. None of the above is true for shareholders, who accept considerable risk to their capital as the price of “having a say” and maybe getting a better return on their money. If you want to buy shares instead of putting money in a savings account, nothing is stopping you. Apart from the fact you want to have your cake and eat it too.

  • chris massey-lynch

    Max Keiser Show(with Stacy Herbert) and Max on the Web .
    More information on Finance and Banking .

  • rabbitlug

    ” If you don’t want to pay there are plenty of other banks you can turn to, which you have done.”

    You make it sound so simple. In the real world most people do not have a degree in economics, in fact most people don’t understand the difference between a bank and a building soc in exactly the same way that most people don’t understand the difference between a petrol engine and a diesel one because said people are not trained mechanics.

    And yet we have no choice as to whether we open an account or not as wages are paid directly into a bank account so most people will do the logical thing and head to the nearest bank to make enquiries (OK, since the advent of the Internet this is changing).

    Without giving you a full financial history I will say that my bank (Lloyds TSB) are utterly despicable, they prey on the naivety of the young and honeytrap them into as vicious a circle of debt imaginable. In the same way that the current payday loans sharks are being regulated right now because they cannot be trusted to act fairly, the bank were / are just as bad in their day. I know people today who pay the bank over 10% of their annual income in charges for going a couple of quid overdrawn.

    Overdrawn… I can see the argument: one should not spend what one doesn’t have. This argument is fine if you’re not poor and of poor parents, but if you’re starving having not eaten anything more than toast for 3 days, then you’re desperate. If you’re desperate, you will accept “help” from the devil himself and this is exactly what happens to a huge number of people each year.

    In my own case, I had run up a £2,000 overdraft by the time I left uni which Lloyds immediately converted into a loan at an exorbitant rate of interest and with compulsory PPI. With regard to PPI, I even argued that I couldn’t afford it and didn’t want it and was told quite clearly that unless I agreed to pay it, they would not give me the loan and the entire £2,000 would be immediately repayable. They even threatened courts and prison.

    This was to a naive 21 year old.

    Four years later, Northern Rock were offering me 6.5X my annual salary as a mortgage and telling me that I REALLY needed to do this…

    Banks may not be public utilities, but they are equally essential in the modern world and they deliberately act like disingenuous c**ts.

  • Pescadorean

    what a load of utter crap. You are part of the Barclays PR machine, aren’t you?. I was NOT a bad customer, I made hardly any transactions from my deposit account, and I kept a balance well over 25K. Why are you defending these despicable people? Of course they are not a utility – but that doesn’t give them the right to act delinquently.

  • Newsbot9

    Not quite the point made, though, is it?

  • manderville

    I find it very odd that banks have introduced codes of ethics for their staff when the it is the senior managers who behaved in an unethical way, and often forced their staff to do so as well.Perhaps they should get their branch staff to draw up a code of ethics for senior management.

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