Getting value from our banks


            The UK state needs to get some cash back from  its investment in the banking industry. Progress has been made in getting the state out of special loans and guarantees offered during the crisis. Taxpayers have received money back,  interest and fees to compensate them. There remains the big issue of the large shareholdings in RBS and Lloyds. The lack of progress in this reinforces my view that we should have done all the work supporting broken banks through short term loans, guarantees and restructuring, rather than buying shares. I am not planning to go over that argument again today.

         Instead I want to talk more generally about what customers expect from their commercial bank. Fresh from the excitement of reading more about how Terry Leahy transformed Tesco, it seems to me that our commercial banks need a big dose of asking their customers.

          My commercial bank should know all there is to know about my finances. My  income I earn goes through the current account, and most purchases I make are itemised on a card payment system. The only thing the bank does not know is how I spend the smaller amounts of cash I withdraw to pay for car parks and other purchases that require notes and coin.

                  In contrast the large  food retailer I use from time to time knows much less about my financial life. They know what items I buy when I shop there. They use this data to full effect. I am sent coupons to buy more with a discount if I undertake a larger shop in a specified time. I am offered extra bonus points or discounts on products I have bought in the past. I am invited to special promotions at the store. I get 1% back on all my purchases through the discount card system. In other words, my food retailer knows I shop elsewhere and they want more of my business. They reward loyalty, and they encourage a wider relationship by intelligent marketing.

                 My bank hardly ever approaches me with an offer of any additional service. It does not notice if I have some cash that could be put into a savings product, or am short of cash and migth need a personal loan. It may see a customer  taking out a mortgage somewhere else, or buying a car, but fails to make contact to see if they can help. The bank I sometimes use in central London regards queues as part of normal retail life, and does not match the food retailers in opening sufficient counters when demand is high. The only welcome innovation in recent years is the single queue.

               Customers want to feel the bank is on their side, but all too often feel it is not. A healthy dose of getting to know the customers, and offering us the services we want at good value prices would be most welcome.



  1. Alister Cyril Blanc
    July 30, 2012

    The solution is bankruptcy; these banks – they are only middle-men, not contributing any tangible value. The monetary order is borne again, with no need for appointed central bankers, with no need for insincere price signals contrived according to the arbitrary will of a few rather than the transactions of the many.

    The age of central bankers is over.
    The Truman Moment is now, or whenever you want it to be:

  2. Pete the Bike
    July 30, 2012

    I don’t want to feel the bank is on my side. It isn’t so I would be stupid to believe it is. I do the absolute maximum to keep my bank out of my affairs. Most of my business is done in cash as are as many of the personal transactions as I can. Sadly in modern life there are things you need a bank for but the very last thing I want is for them to know more about me and offering me loans every time my account drops a little. Why does anyone think it is a good thing to have massive too big to fail banks and over bearing government knowing every detail of your financial, personal and business life? As far as I am concerned banks are an evil I cannot presently avoid, but I’m working on that.

  3. Mike Stallard
    July 30, 2012

    This is going to sound awful.

    I bank with the Nationwide and am treated with respect and even recognition. There is never a queue.
    You can ask to see “Steve” who remembers you and is kind and helpful – even up to a cup of coffee – when he discusses our financial arrangements. To my surprise he actually massaged a small profit over the past five years. He has time and his predecessor (who got promotion) did too.
    I feel that I can go there whenever I want and get reassurance and expert help.

    I will not say which two High Street banks I was with before, but their service was lousy. They hit me when I was down. They swindled me when I needed to transfer money. On one occasion, they made my wife cry.

    1. Martyn
      July 30, 2012

      Doesn’t sound awful to me, Mike. I, too, have been with NW for donkey’s years and can second all that you say about your branch, because it applies also to mine.

      I had a spread of ISAs aquired over the years with a big bank and asked if I could roll them up into a single ISA for convenience. I was simply told ‘no’, take it or leave it. The bank offered no advice or alternative and patently couldn’t care less about what I thought, so I took it all elsewhere and rolled them up.

      Stuff the big banks, say I, they have far too much of our money in accounts plus bailout by the government with our money and in my experience are arrogant and uncaring about their small customers.

      1. Farmer Geddon
        July 30, 2012

        I have had 2 bad experiences with NW:

        Internal credit card fraud on a card that was never activated – resulted in continuous phone calls day & night from them & took a strongly worded letter to chief exec to stop.

        Also triedto sell my recently bereaved father a savings account based on shares which he did not need in 2008. Very hard to cancel it.

        I don’t have anything to do with NW now but can’t suggest any better bank. Perhaps we should start using small l0cal buidling societies.

  4. lifelogic
    July 30, 2012

    You say “Progress has been made in getting the state out of special loans and guarantees offered during the crisis. “.

    But in the case of RBS I suspect (and from personal experience) this has just been achieved by calling back or reducing perfectly sound loans to good customers with a huge consequential loss of growth and tax revenues for the government. So did they gain anything on balance?

    My bank does indeed ring me when I 9rarely) have large amounts on the current account usually just for a day or so being shuffled around. Usually to try to sell me some of their duff saving products paying 1% less tax (and -4% inflation) or more complex ones. My advice is do not buy anything from a bank if you can avoid it – better value can nearly always be had elsewhere.

    They do also use the data they have (and the credit reference agencies) gather – usually to rip people off by upping interest rates to 30%+ on credit cards for anyone they can see who they think cannot repay at that time (this is rife at the moment). Indeed I think the credit reference agencies are surely an anti- competitive force that needs a full investigation by the competition authorities. The also are often poor at judging risk as they take little account a assets. Usually just looking at borrowings outstanding and payment record.

    1. lifelogic
      July 30, 2012

      I see that from December 21st 2012, insurance providers will not be allowed to charge any client more than any other on the basis of sex alone. Currently women are charged up to 15% less for life assurance than men. Will also apply to other areas in one direction or other. An absurd market distortion cheered on by “I am no Tory” Cameron.

      Yet another tax on people and an inconvenience for industry. Best not to insure in general. Insurance premium tax, this 15% surcharge, all the overhead cost/commissions of the insurance company and often the legal costs of fighting a claim and time wasted making one. Generally insurance is a net waste of money unless you know you are a high risk – but they they will probably find a reason not to pay out as you did not disclose!

      1. Lindsay McDougall
        July 31, 2012

        Insurance companies should be allowed to discriminate between any actuarially identifiable groups that they wish to, without any interference from government at all. Intelligently applied, discrimination is a good thing.

        We might also apply intelligent discrimination in health care. Is it likely to be value for money to give a liver transplant to a chronic alcoholic? Is it intelligent to give treatment for cancer to an 83 year old in the early stages of Alzheimer’s disease?

        1. lifelogic
          August 1, 2012

          Indeed but it all goes against the enforced equality political religion that creates so many pointless jobs for the state sector and destroys so many real ones.

    2. MickC
      July 30, 2012

      You are entirely right about the banks’ behaviour to customers who are perfectly creditworthy. Loans (mainly overdrafts) which have been properly run by the customer have been called in, and the customer effectively forced to take term loans on much worse rates of interest. That is one reason why the economy is dying on its backside-no-one in their right mind would take a loan now. Those with money will not risk it and are quite prepared to have lower standards of living provided they are out of the clutches of the banks.

      More to the point, this government is not doing anything to sort out the problems. This merely encourages the view that the Tories are the friend of big business rather than the “people”. The voters will take their revenge at the next election.

    3. Tony Baverstock
      July 30, 2012

      “But in the case of RBS I suspect (and from personal experience) this has just been achieved by calling back or reducing perfectly sound loans to good customers with a huge consequential loss of growth and tax revenues for the government. So did they gain anything on balance?”

      Yes they did not have to sort out a major bank failure.

      You may have heard we are in a credit crunch. Less credit is available. So banks have to reduce assets, Long term loans such a mortgages cannot be called. Large corporate debit is all securitised. So most banks have little option but to recall short term loans. Add to this the Government pushing banks to increase capital and taxing the size of their balance sheets.

      1. lifelogic
        July 30, 2012

        Yes but the companies with reduced loans (who were never any risk to the bank) then delay developments, lay people off, delay taking people on and the government thus has less tax and more benefits to pay.

        The government instead or having a good and profitable performing loan (through RBS) has less tax, less growth and more benefits to pay and shares in a smaller bank, worth less and with annoyed and angry customers!

  5. norman
    July 30, 2012

    Can’t think why anyone would physically go into a bank. Been with an online only bank now for over 5 years and never once have I felt like I missed out on anything. Any time I’ve need to get in touch you’re on the phone with a Brit within a minute and problem sorted within five. Always at a time that suits me be it 10pm on a Friday night or 6am on a Sunday morning. No annoying press 1 for this, 2 for that.

    It would seem sensible for a bank to call a customer in the middle of March because they see his car insurance payment comes out in April rather than the spam they send (deleted unread) trying to get me to call them for car insurance.

    Speaking of using the information available, with the government being majority shareholders in two major banks surely now is the time to start monitoring people’s accounts for what they’re spending their own money on, make sure it’s nothing immoral. For example someone could be taking large amounts out in cash on a regular basis. Why would someone be doing that, eh? My spider sense is tingling!

    Definitely worth thinking about.

    1. Jerry
      July 30, 2012

      Norman, not everyone has access to or trusts online banking, in fact I would counter, why would anyone use a ‘virtual bank’ when almost all transactions can be done in branch with a real person?

      Many of the problems with banking have been caused by impersonal banking, just being an account number and not a real person, and one can’t get more impersonal than an on-line/call-centre only bank…

      1. alan jutson
        July 30, 2012

        Jerry agree the personal touch is best.

        Babnking on the internet ok for some but if you get a computer crah yours or theirs then you are stuck.

        Even worse if your own computer is not fixable, all the info is on it, but it will not work again.

    2. Michael Lee
      August 2, 2012

      For someone to make regular cash withdrawals from their bank account would be an odd thing to do. But if it’s their money, it’s not the prerogative of the bank to be arbiters of morality. Some politicians consider themselves qualified to do this, but who gives a twopenny whatsit what they think?

  6. MickC
    July 30, 2012

    You are making the mistaken assumption that banks are still imbued with an ethos of professionalism where they look after the customers best interests. They are not-they are imbued with salesmanship where they are happy to sell any “product” no matter whether it benefits the customer or not, just so long as they make profit on it.

    There is a huge difference between normal retailers (Tesco for instance) where the customer can see, touch and assess the product immediately and the sellers of “services”, where you actually buy before you find out the quality etc. The failure to recognise this difference has been catastrophic to the economy and people in general, who have been conned by financial snakeoil salesmen.

    Unfortunately the root cause of this was “Big Bang”, where effectively the concept of conflict of interest was quite simply ignored. I did not understand at the time why this straightforward “consumer protection” principle was ignored-and knew it would cause trouble later. Again unfortunately, it was introduced by a Tory government.

    I am entirely in favour of free markets-but where one party to a transaction to a deal does not understand what is being sold, or more likely is actually misled, there is not a free market.

    So, sorry, I don’t want ny bank to know all about me, I want to know all about it, such as whether it is honest (unlikely) and solvent (none are currently).

    1. A different Simon
      July 30, 2012

      “Just so long as they make a profit on it”

      That would be an improvement on just so long as they make commission on it .

    2. Tony Baverstock
      July 30, 2012

      “Unfortunately the root cause of this was “Big Bang”, where effectively the concept of conflict of interest was quite simply ignored.”

      I keep hearing people blaming “Big Bang” before they do so perhaps they can look on wiki and understand “Big Bang” had almost nothing to do with banks,

      So called “Big Bang” in the UK in 1986 was coined to describe measures effecting the UK stock market including abolition of fixed commission charges and of the distinction between stockjobbers and stockbrokers on the London Stock Exchange, as well as change from an open-outcry to electronic, screen-based trading.

      1. Jerry
        July 30, 2012

        Tony, whilst few will disagree with your definition, what most people talk about when referring to/blaming “the Big Bang” is the culture that started in 1986 in the stock market and then spread to many areas of the financial services industry.

      2. forthurst
        July 30, 2012

        The Big Bang resulted in most of the brokers and jobbing partnerships being bought out by Wall Street banksters. I seem to recall much talk of bamboo curtains to prevent conflicts of interest. (Can you believe it?) All the advantages were achieved by computerisation and the modernisation of back office procedures. The disadvantages were what the City has become and done to the British economy and its people and some of its previously great companies.

        1. Frederick Bloggs
          July 31, 2012

          What the Thatcher reforms of the city of London did was to replace a network of semi-competent (and many totally incompetent) ex public-school types with a load of Americans as the Americans bought up the old British houses. Barings is a shining example of British incompetence. I interviewed there once. It was shocking. They did not have a clue.

          Most attacks on the city post 1986 are anti-american. There was just as much wrongdoing before 1986 as there was after it. We had a secondary bank crisis in the 1970s and plenty of financial scandals which we have all forgotten about.

          The problem is that loads of ex-public school boys, especially those who read the Guardian, hate the idea of smart hard working working-class people making lots of money. It is anti-American snobbery pure and simple.

          1. forthurst
            July 31, 2012

            Being American is no justification for being crooked nor is there any need to rehearse ancient history for my benefit since I was there at the time. The issue however is over consequences and e.g. the old jobbing partnerships did not have the backing of banks and could not therefore afford to take large long or short positions on their books in order to rig the market, nor did they at that time have computer programs to engage in flash trading or front running and so their offers to deal were measured in greater than millemicroseconds, rather more gentlemanly, rather more British, in fact.

  7. Alan Duckworth
    July 30, 2012

    Excellent odservations. The breathtaking arrogance of the banks is the first thing that needs to be addressed and until it is we will see no improvement. Arrogance is at the root of all the recent scandals, they think that they are the only ones with the answers and that we the customer know nothing. Bank charges and their attitude to them are the perfect example. They are the only business that levies punitive charges on its customers and they think that not only is that ok but see it as a major profit centre !!! Not only is it immoral but it is bad business by forcing their worst off customers into a downward spiral of debt but it is bad business by making it harder for these customers to meet their obligations often forcing them to default resulting in the bank receiving nothing. It must also be said that resolving this problem is another of Camerons broken promises. A complete root and branch overhaul of the high street banks is long overdue but mark my words, this government will do nothing !

  8. lifelogic
    July 30, 2012

    Terry Leahy is a god chap and indeed helped transform Tesco.

    Having said that, much of supermarket profits are made by tricking customers, encouraging them to buy more than they need with bogof or 2 for one, 3 for 2 deals. Scattering the items the customers mainly seek around the stores and changing their positions regularly to confuse and so you buy other things, confusing the customer with large half empty boxes and all sorts of other tricks. Sell air and water is a good plan for them. So instead of a bag of 100 dried apricots you have 10 wet ones for the same price or a half empty box of air.

    French supermarkets seem very good at this too and even more confusing in French. Often putting the same items in several different places to make price comparisons very hard with endless usually pointless variations of product.

    Other tricks are changing a standard product for a new flavour/variation in a very similar pack so you buy it by mistake, using children pester power for sweets, toys, comics and the like and putting things in multi-packs so you have to by six or ten rather than the one item you wanted.

    They then push suppliers hugely on price and so you tend to get poor quality as every penny is saved.

    I would not eat much from most supper markets certainly not the bread, the horrid long life crumbly pittas and the like, and the foul (to me anyway) ready meals over sweet puddings and cloying, sweet cake like bread.

    I might buy soap powder, loo roles, flour, salt, mustard, butter, milk and a few other raw ingredients there not much else if I could avoid it.

    1. Bazman
      July 30, 2012

      Bankrobber RocknRola shoplifters of the world unite.

    2. Gary
      July 30, 2012

      The irony is that supermarkets are essentially playing the yield curve. They are financiers. They take cash upfront and pay suppliers 90 days, putting the money to work in the interim. The margins on their goods can be kept razor thin as long as the yield curve stays favourable.

      Leaves that Tory politician ,who frowns on cash, looking even more clueless.

    3. David John Wilson
      July 30, 2012

      The government needs to do something about the two for the price of three offers and even the two for the price of one on perishable goods. The former can’t be afforded by the poorer members of the population and the latter are of no use to pensioners where the second item will rot before they can use it.

      It is about time this country took a lead from Canada where certainly in Alberta two for the price of one means that you can by law by one item half price.

      1. A different Simon
        July 30, 2012

        Can’t agree David .

        If the supermarket wants to offer bulk discount I find it hard to see what business that is of the Govt ?

        To make a distinction on the basis of multiple purchases would be artificial anyway because bulk discount is already applied in other ways . eg an individual bread bun it is more than 1/6th of the price of buying a packet of 6 , similarly with a small bottle of tomato sauce vs a large one .

        As a single person I find it annoying but I cannot that it is any of the Govt’s business or a worthy use of their time .

        On the otherhand I think the Govt should implement consumer protection to prevent the big banks and payday loan companies operating as sharks levying multiple hundred or thousand percent interest .

        The evidence has shown that the Govt is not interested in reforming the financial services sector . This is a shame because the complacency shown by the Govt and the London based financial services industry will be their downfall .

        Neither are anywhere as good or as important as they think they are or keep telling everyone .

        Both are past their sell by date .

        1. Bazman
          July 31, 2012

          The subsidising of bulk beer purchases by increasing the price of the fruit and veg is something to do with the government and if the supermarkets want to argue it is not then we will see what else is not to do with the government..Fingers together lean back in chair and say Well..that’s your decision..Just as they do.

    4. lifelogic
      July 30, 2012

      Sorry good not “god” though perhaps both I do not know.

      1. Bazman
        August 1, 2012

        Can also spell dog backwards.

    5. Michael Lee
      August 2, 2012

      You do a lot of whining lifelogic. Don’t you have any constructive comments to make?
      I was in France yesterday. I didn’t waste my time wandering around supermarkets picking faults with their marketing methods.

  9. Nick
    July 30, 2012

    You’ve missed the point.

    The banks are now there to provide cash for government to piss up the wall. That’s what QE is all about.

    You should be asking how you’re going to repay the debts you run up, including the one’s you’ve hidden off the books.

    Just stating the numbers are there, and ‘its not the way it works’, isn’t good enough.

    You’ve still failed to met your electoral promise to publish the numbers.

    If we can’t trust you when you say, if I’m elected, I will publish the numbers, what are we to do with all your other promises to get elected, on the payroll, getting all that money, expenses, pensions etc for the next five year.

    1. lifelogic
      July 30, 2012

      You say “The banks are now there to provide cash for government to piss up the wall. That’s what QE is all about.”

      Certainly some truth in this they are now partly, by ownership and through regulation, another arm of government and yet another back door tax system. Rather like QE which robs peoples pensions savings by forcing them into duff annuities lent to government to waste (other than pensions in the state sector of course which are not robbed).

  10. lifelogic
    July 30, 2012

    Listening to the “any questions” podcast this week re. the energy issue yesterday – it is quite clear that non of the panel had a clue about the economics, science and realities of power generation – wittering on about absurd, pie in the sky wrongly called “renewables”. Complete drivel and even some mad woman who has swallow the “Spirit Level” agenda whole. Thinking and logic clearly not a strong point for the panel this week or any week. A little more sense in the audience as usual.

  11. Jerry
    July 30, 2012

    Sorry John, I really can’t decide if you are being serious or devils advocate here but the very last thing any bank needs to imitate are the large supermarkets and their practises, your local corner shop perhaps, but most certainly not the impersonal -stack ’em high- supermarkets. In fact I will go further, it was the banks attempting to be the banking equivalent of such supermarkets that got the industry (and us all) into the current mess we’re in. Just as supermarkets use ‘smoke and mirror’ sales techniques, banks stated to used similar techniques to sell their ‘products’.

    We probably need a return to simpler forms of banking. You talk about banks needing to get to know their customer, offer a personal service, but isn’t that exactly what old fashioned banking used to be, complete with a local branch manager (ie. someone who has been at the branch, or at least local to the area, for years if not decades), proper regulation and -last but not least- reputation. The bank manager of old may well have refused the ‘personal loan’ but may well have given the financial advice the customer needed – not just sold that centre-shelf loan that are most profitable ‘product’ for the bank and/or gave the advisor the best bonus…

    1. A different Simon
      July 30, 2012

      Spot on Jerry .

      My late Dad was one of those local branch bank managers and yes he used to love Mr Mainwaring in Dad’s Army .

      He would have taken a dim view of people applying for non-self-liquidating personal loans to support their lifestyle .

      At the same time he was empowered to take a risk by approving business loan applications on the basis of the business , not just suitable security .

      It took decades to establish that culture and as most politicians fail to appreciate it can’t just be restored by flicking a switch .

      Perhaps , like so many things , the destruction of that culture over the past 20 years will prove to have been an irreversible process .

  12. Disaffected
    July 30, 2012


    I was given to understand that banks sale information about our spending habits, on a secret and anonymous basis, to energy companies and alike. The information is used by other companies for market research to know what we spend our money on, how frequently whether in lumps sum or instalments etc. Is this correct?? If so should the money the banks make be passed on to the customers or should they ask the customer in the first place?

  13. Electro-Kevin
    July 30, 2012

    Banks and lenders do not reward loyalty.

    It is wise to distrust the financial services industry.

  14. Sue
    July 30, 2012

    I use banks as little as possible. I have a savings account and a prepaid visa card for direct debits or online purchasing. I deal in cash whenever possible and have no store cards. I don’t trust the banks, the EU or the UK government knowing my business.

  15. alan jutson
    July 30, 2012

    Having done the rounds recently to see what was on offer at all of the various High Street Banks I have to say that I was dissapointed in nearly all of them.

    Firstly if you are loyal to them, You are a MUG, as the best rates are for new savers.

    If you hold any particular account for more than a year, You are a MUG, as with most accounts the bonus period is for one year only.

    Difficult to compare many rates as a simple mathematical comparison is not easy, with offers or Holiday insurance, house insurance, car breakdown cover and a whole host of other “benefits” that you may not need, complicate the process.

    The complete ignorance of a Banks own staff as to what their competion are offering is staggering, when I informed Barclays that HSBC were offering a regular savings account rate of 8% they looked horrified, when I informed HSBC that Santander were offering interest on their Current accounts of 3% they were in disbelief.

    A few years ago a friend of ours sold his business and house, and was looking to put the proceeds of seven figures into an account, whilst he resolved the best place to put it long term, he went to one Bank, informed them he wished to make a sizable deposit, was asked if he was an existing customer and repied no, so was asked to return when the manager had finished his lunch.

    He did as he was asked, and returned an hour later, asked to see the manager, was asked what he wanted.

    He held up a reciept for seven figures, and simply said, you could have had this in your Bank, but you were too busy, so I took my money down the road, and they were happy to have it. He then walked out.

    1. alan jutson
      July 30, 2012

      Selling parts of Banks off seems a good idea if they can get value for money, but the latest sell off by Lloyds TSB of 630 Branches seemed more like a givaway to the Co op Bank who purchased them.

      Think the sum was about £0.5 million for each Branch, which was stuffed with new clients and their money.

      The sooner Banks learn that keeping an existing customer is cheaper than trying to poach a new one, the better.

      The sooner the Banks realise that constantly having to change accounts to get the right rates is an absolute pain in the arse to customers, the better the chance they have of retaining them.

      The other by- product of having to constantly change accounts is the problem of having to fill in changes on tax return forms, where the average person is made to look like a money laundering business, with opening and closing a whole range of differing accounts each year.

      To make matters worse, some Banks are now NOT giving out yearly interest statements, where Interest and Tax deduction Certificates are issued for the very purpose of declaration to Customes and Revenue.

      It would seem to me that most Banks are wanting to maximise their revenue from their customers, rather than working to help their customers maximise their own investments.

      1. Disaffected
        July 31, 2012

        Was this not part of an EU directive?? Wait until the EU banking union comes into effect.

  16. Caterpillar
    July 30, 2012

    (1) I want security. Recently there has been improvement in that when a new payee is added to one’s online banking system many banks send an sms for confirmation. I would like the option to receive an sms everytime a transaction greater than some amount has been made on an account – if your account is under attack, someone has copied your card etc., you’d essentially know immediately.

    (2) I want branch consistency. The performance of many of banks varies greatly between branches. I want to walk in branches of the same name and for their performance to be, pretty much, as expected.

    (3) I do get personal banker calls and offers (unlike JR), but what I detest is the continual need to transfer between / open new savings accounts due to bonus periods. Rather than be informed of a bonus period coming to an end I would prefer banks to transfer any savings into a best suitable product and send a notification that this can be changed within X weeks.

    (4) I wonder whether under a streamlined and simplified tax system whether banks could remove the need for companies/service providers to be PAYE/NI intermediaries. Couldn’t banks fulfil this role with ‘taxable income’ accounts?

  17. Bazman
    July 30, 2012

    You need a packaged account offering many benefits for a monthly fee John. I’m sure you will find them excellent value and the banks falling over themselves to sell them to you and many savings products too. Just enquire at your local branch or you can even find many excellent offers of finance related products at your local supermarket.

  18. Gary
    July 30, 2012

    These middle men, commission skimmers , should go back to be clearing houses and vaults and free up capital that is presently tied up in interest payments from loans made on fractioned reserves(usury). The freed up capital can be used to create businesses that manufacture for export. When the middle man IS the economy, the economy dies.

    The system should work (it already does to some extent) whereby transactions and consumption are financed by bills of exchange (factored notes) and gold used as a store of value ,or long term savings, to be used in turn as 100% reserve loans for capital projects. Banks become what they were first intended to be, clearing houses for the bills and vaults for the gold.

    Too many rentiers that control govt have become too rich to ever give up the crooked system that we currently have.

  19. Matthew
    July 30, 2012

    Thanks for your tip on T Leahy’s book – sent away for it.
    One my clients – do the audit – banked with same bank for years – loan secured on a floating debenture. Values fixed for years – no warranties triggered.

    Then bank raised the debt cover ratio (interest) from 1.5 to 2.0 and PG’s asked for
    No discussion – set by backroom boys
    Effect on the client is that they become mildly paranoid – what will the next step be?

  20. Leslie Singleton
    July 30, 2012

    Blimey. No interest at all in the Banks sending me stuff (as they do–which Banks are you with such that you say you do not get enough paper from them?) thinking as I do that they should stick to their knitting and leave Insurance etc to Insurance companies.

    And I don’t mean just the Banks. The view from where I sit is that it is a silly conceit for managements to think they can simultaneously run completely different disciplines – Gas companies selling Electricity etc – and for my money the sooner it stops the better.

    Back to the Banks it is unarguably obvious that a Glass-Steagall should be brought in (the so called question-begging ring-fencing is of course totally inadequate) and that they should then be left to get on with it. This Government’s attempts to have it both ways with the Banks is risible.

  21. forthurst
    July 30, 2012

    What sort of business would Tesco have become had it decided to achieve higher growth and profits, not through expansion and logical extension into other retail customer facing areas, but by moving into eg commodities relating to food; once in commodities which related to groceries, then broadened into other commodities as recruitment went further from existing areas of expertise into that of general spivery involving taking short positions, trading derivatives etc. Soon your P/L and B/S were focused not on the rewards for serving the public but through market manipulation with the aid of computer programs etc.

    It should be of no surprise to banks’ retail customers that instead of their bank offering them a banking service, it is the other way round: the bank is using them to service the banks’ need for cash by arbitrarily calling in loans. If customers should wish to borrow cash, their local manager has neither the expertise nor authority to make a loan and any such loan might require substantial collateral, whereas at the corporate level, different rules apply; the spiv in charge of corporate loans can lend billions to a fellow spiv which after an inevitable downturn becomes uncollectable. Meanwhile most of corporate activity is focused on all the various forms of self-validatedly ‘legal’ forms of spivery which banksters engage in to plunder their customers and the economy as a whole.

    Edward Heath was largely wrong on most things, but with his concept of the ‘unacceptable face of capitalism’ he was right. The unworkability of communism does not automatically validate all forms of laissez-faire capitalism.

    1. Caterpillar
      July 30, 2012

      I don’t buy an unrelated diversification argument – if an organization defines itself as a financial intemediary then a relationship between retail and investment banking doesn’t seem unrelated. (I am not saying every bank should see itself in that way.)

      1. forthurst
        July 31, 2012

        The proof of the pudding is in the eating. Are you seriously suggesting that all the woes of the British banks since 2008 would have occured had they stuck to retail banking?

        1. Lindsay McDougall
          August 1, 2012

          If the Bank of England had included asset prices – particular property prices – in the inflation index that it targeted, then control of the money supply would have been tighter between 2001 and 2007 and the banks’ woes would have been much less.

          If you are going to use inflation targetting to control money supply, then the inflation index should be based on overall basic prices, with property and asset prices included and VAT and excise duties excluded. Government levies are not part of the basic price (as any good Ryanair salesman will tell you).

  22. David John Wilson
    July 30, 2012

    Forget about the government getting its money back, what about the small shareholders in Lloyds Bank who had the price of their shares totally decimated by the government envorced merger with the Halifax. Don’t they deserve some of their money back?

    1. Lindsay McDougall
      August 1, 2012

      Not from taxpayers, they don’t. If they want to sue Gordon Brown, they should go for it. However, Brown will deny enforcement, so they will need evidence. Are there no incriminating e-mails between Brown and LLoyds?

  23. Michael Cawood
    July 30, 2012

    My bank on the other hand takes an interest in my finances and contacts me from time to time to invite me to maximise the returns on my investment. It also offers me other services including insurance for my house & contents and for my car. Because of this I will not be changing my current account to another bank. In addition, many years ago, following a period out of work they gave me a loan when I was working again and needed it, which has long since been paid off.

  24. Lindsay McDougall
    July 30, 2012

    The best approach in October 2008 would have been not to support broken banks at all but to ask RBS and HBOS to value their toxic assets as best they could and to send in an administrator or receiver as appropriate. That way, shareholders would have been first in the firing line, which is as it should be.

    The only reason not to sell off taxpayer holdings in banks at present is if we can clearly get a higher price later. It’s not obvious, so why delay? Virgin Money, Co-operative bank, M&S, and Sainsburys all – and no doubt others – want a piece of the action.

    It would also help our reputation if the UK government, politicians and the media stopped making Barclays the industry whipping boy. Barclays is the large bank that did NOT repeat NOT repeat NOT hold out its begging bowl for taxpayers’ money, and has not (as far as I know) laundered large amounts of money for criminals. Surely a role model.

  25. Tony Baverstock
    July 30, 2012

    “Instead I want to talk more generally about what customers expect from their commercial bank. Fresh from the excitement of reading more about how Terry Leahy transformed Tesco, it seems to me that our commercial banks need a big dose of asking their customers.”

    The big differance between Tesco’s and my bank is when I leave Tesco’s I will have to pay for what I brought. With my bank I get internet access to check my balance and make payments (which will now settle in about 2hrs to other UK banks), to move money between accounts. I get direct debits and standing orders to pay my bills. I can receive my salary into my account, I can send them cheques and cash they will pay into my account. I have a cash card which lets me draw cash all over the UK. I can also use the card pay for goods in most shops in the UK. And the costs of all those products if I stay in credit is ZERO, NOTHING, FREE.
    So for those who want a better service maybe the banks should introduce accounts where you have special fast track queues, every one says hello to you in the branch and offers you help, but they change you £25 a month. Any takers?
    By the way Mr Redwood have you considered what would happen if banks did try to sell to you in the same way Tesco’s does? So they send you details of loans if your account is low, The Consumer Association and every consumer group would then be accusing the banks of encoraging debts. If they send you details of deposit accounts it could only be of their products, (they are not IFA’s), and if the rates where not as good as others the same consumer groups would be complaining the banks where misselling products.Then the FSA would force the banks to pay addition interest to all the customers who had taken up the saving offer.

    1. MickC
      July 30, 2012

      Sorry, no such thing as a free lunch-of course you are paying, one way or another!

      1. Tony Baverstock
        July 31, 2012

        Please explain to me how?
        Even if I had £5,000 in my account all year, I don’t, the bank would earn £50 a year on my account.
        I will of cause pay if I go over drawn without permission but I make sure I don’t do that.

        1. Jerry
          July 31, 2012

          Even if I had £5,000 in my account all year, I don’t, the bank would earn £50 a year on my account.

          Exactly the bank earn £50 when you should earn that money, after all you are lending them your money. OK, so we agree such terms when opening an account but for the bank to then spin the fact so that they appear to be offering free banking etc… So, as MickC says, there is no such thing as a free lunch!

  26. Alan Wheatley
    July 30, 2012

    It will be interesting to see what happens when the Co-Op bank starts running the 600odd additional branches it is acquiring from Lloyds. Could this be the shake up high street banking needs?

  27. Richard Lewy
    July 30, 2012

    A good way of improving the return on the state’s investment in banking would be to reduce the size of the state’s guarantees.This could be done, without risking stability, by:
    1. Making the state’s implicit guarantees explicit, and then
    2. Reducing the state’s explicit guarantee by say 10% each year.
    Confidence in strong well capitalised banks should permit management to maintain their balance sheets but weaker banks will need to contract gradually, as state support is withdrawn and deposits move to stronger banks.

  28. Chris
    July 30, 2012

    Would like a bank that has opening hours that suited the customer, that did not have long queues, and that had a direct telephone number that got through to your branch and not a central clearing system, that communicated with you direct from the branch (too often the local branch is completely unaware of data/info that is supposed to have been passed on to local level),that was committed to looking after you as a customer, that did not phone you up about promotions, that did not invest your money unwisely. I preferred the old fashioned bank manager, instead of the somewhat robotic individuals whose language is steeped in jargon and who try to sell you very complicated/cumbersome to manage investment packages.

  29. Iain Gill
    July 30, 2012

    I moved my money out of a bank where the call centre abroad was staffed by folk who couldnt understand basic English.

    I actively move money into banks where I can actually get to speak to a properly trained banker when I ring them.

    One bank which refused to pay out on a 5 year bond when the 5 years were up and made me wait 5.5 years has had all the accounts of my extended family moved away and we will never go back.

    1. alan jutson
      July 30, 2012


      I agree with your families actions.

      I did the same recently to a High Street Bank in which as a taxpayer, I am a part owner.

      The only problem with the above action is that eventually you will run out of Banks in which you can deposit any money, as they are all nearly as bad as one another given the customer service they offer.!

      Another High Street Bank who has wanted more of my business of late (at least that is what they said) promised to give me excellent service via a personal Banker, I deposited some money, got a credit card, albeit with a low limit, exceeded that limit by a few pounds one month and thus got fined £12.00.

      Rest assured I sent them a very nice letter, got the fine cancelled, but they also now get less business, because as a result I now re-use the card (from another Bank) which has a very generous limit.

  30. Jon
    July 30, 2012

    It would be a good idea to take a Terry Leahy approach or atleast customer research for a start. However, I think its far more fundamental than that.

    I am at a loss why Parliament does not look into the cost of just normal banking. Put aside the investment banking issues for a moment and it still seems to me there is a heard of elephants in the room. I could be down to my lack of understanding of retail banking.

    Its likely that the charge for current accounts will be around £15 to £20pm. Its like computers, self online banking, automated electronic systems etc never happened. Just like the investment banking side taking the same percentage fee now as they did in the 1970s so does the retail banking side.

    In other industries including other sides of the financial industry we have seen costs come down and quality of services provided go up. This has not happened in retail banking, its like the silicone chip, calculator, computers, software etc never happened as the costs have not come down.

    Yes, they could take a look at the Terry Leahys’ of this world but then they could just as easy take a look at the stall holder who has software behind their till machine so knows how many whelks to order the next day quickly rather than counting up manually how many were sold.

    Over the period of the previous government there were far too many reports that cost us much. I would though like parliament to look into the lack of price competition in retail banking.

    I have online banking, my bank send me in the post two statements a month. How many other millions of their customers get the same? Never mind the Terry Leahy’s lets just start with a Whelk stall and work up from there.

  31. zorro
    July 30, 2012

    I think that most people want better value, more accessible online banking, foreign currency accounts, better storage facilities, more accessible arrangements with foreign banks, and no rip off withdrawal charges abroad. They also need better value credit cards, and loans which are betted targeted to need. Banks should be able to provide this and still make a healthy. Indeed, some people might be prepared to pay for a current account hich facilitated some of the things that I have mentioned…..

    Banks have had it to easy in that there have been too few choices for people smongst the big banks. They have used depositors as their speculator funds, and have lost the trust of the general public.

    I believe that this can only be recovered with a separation of retail/casino banking, and some of the better services which I mentioned above. There must no longer be any implicit guarantee to bail out any bank, only some depositor insurance.


    1. zorro
      July 30, 2012

      healthy profit

  32. Lady Carole
    July 30, 2012

    Excelent advice for any buisness ,bankers please note you are largly percieved by the public along with the government and all its agencies and the energy and vutility companies as THE ENEMY .A situation of your own making due entierly to greed ,short termisim and a false value of your own importance .This will change as the economic situation worstens as it must .You have all yet to realise things can never go back as they were ,as long as the powers that be have that view no real progress is going to happen

    1. Tony Baverstock
      July 31, 2012

      I agree your comments about how we bankers are perceived. However, for all the failings of bankers such as myself its also true that most of the reasons we are blamed is lack of understanding from most commentators about finance and banking, and the two faced politicians who are desperate to cover there own failing.
      The reason for the UK banking crisis was an inflationary housing market fuelled by cheap credit. If the Labour Government had changed the inflationary measurement used by the UK Monetary Committee in 2003 from RPI to some measure which included house price inflation, rather than to CPI then no banks would have need to have been rescued.

  33. Evan Owen
    July 31, 2012

    Are you being serious John? All the evidence suggests that this very practice that has gone on for decades is what causes the problems.

  34. David Langley
    July 31, 2012

    My bank has left the selling to the poor old cashiers, they look stressed out at having to pester me when there is an obvious queue building up. The bank has no real empathy with its customers as its obvious that the retail atmosphere is full of panic really and grim pain at having watched their sharesave schemes crash into dust as the greedy investment arms have thrown their employee bonuses into disrepute.
    Banks have become places of necessity, where the public have been coerced into a largely cashless society. Watching old people struggle with their management of their accounts is sad. The recent IT debacle reminds us of how fragile we have become and how dependant on third party management of our lives we are. Now we are being told that soon we can wave our cards at a machine and our payment is taken. What disasters lie ahead.

  35. David William
    July 31, 2012

    I do not believe Mr John Redwood quite understands the workings of a Bank or the financial system come to that or he would not have made that comment or did he just want to wind up someone. To bring this to a level he may understand, you would not go to a supermarket if it only sold its own products so why buy anything from a bank other than a deposit account, if you need a financial product go to your local IFA they will have access to the full market offerings on any financial product and give you unbiased advice (why because they are regulated to do so far greater and more tightly controlled than a bank and have to prove to the regulator that what advice they give is appropriate advice and hold evidence to support this unlike Banks). Actually that sounds like a good format for MP’s they should be made to prove what they say.

  36. sm
    July 31, 2012

    Some more competition, fast track rules for new entrants particularly if they are capitalized with much higher levels with equity and can fail safely.

    Start to regulate with mandatory paycaps/paycuts, distribution bans etc whenever a bank requires support on an ongoing basis.

    Some controls on leverage and a reduction in the tax preference shown for debt over equity.

    Breakup the state controlled banks up and or close them down, this will allow new growth to replace the failed.

    Any chance of an audit on the Bnak of England similar in scope and detail as to what Ron Paul is suggesting for the Federal Reserve?

  37. Lindsay McDougall
    August 1, 2012

    Once something like Glass Steagall is in place and free banking comes to an end, I wonder what form bank charges will take. In the early eighties, the South African bank Nedbank paid interest on your positive balance and charged you a flat rate per transaction; a bit like a Virgin One account but without the mortgage. That seems to me to be fairest and it does away for the need for separate current and savings accounts. For all I know such accounts may exist in the UK. What is other peoples’ experience?

    1. Bazman
      August 6, 2012

      £1 a year interest. £1 per transaction. Certain transactions £2 and various ‘administration’ fees costing the bank almost nothing. All banks charging more or less the same with smoke and mirrors charging to hide this fact will not be far from the truth. Billions of profit. Toothless chaps regulator. If you think any different then don’t take your shoes off you might float away…

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