Sam Dunn: Banks fail the poor as they fatten their profits

Are you a moneyspinner for your bank? If you can tick all the boxes on the "product" list - current account, mortgage, credit card, home insurance - and aren't horribly in debt, you can count yourself as a profitable customer for the bank's bottom line.

This relationship isn't just one way, though. While the banks will have worked out every way to make money from your custom, you too can benefit.

Savvy savers hunting the best interest rates will prosper, as will shoppers with cashback credit cards who never fail to pay off their bills each month.

Hail the credit card "rate tarts", too, who follow 0 per cent deals and pay no interest.

And let's not forget the borrowers with enough savings to use an offset mortgage that cuts the cost of their home loan.

This list of how to be clever with your cash goes on, but you can join it only if banks and other lenders let you become a customer in the first place.

For the poorest members of society, it is getting harder than ever, as highlighted last week by a report on bank branch closures (see News, page 25) from the University of Nottingham.

It found that branches closed in greater numbers in inner-city and old manufacturing areas than in affluent parts of the UK.

Lack of branch profitability was cited as a reason - no surprise when a community hasn't much money to save or invest.

The growing popularity of internet and telephone banking was also blamed. These are cheaper "channels" for the banks, and some of the savings made on operating costs do make their way into better deals for consumers. However, the elderly and other people on low incomes in poor communities are often unable or unwilling to bank in this way. Nor do many have easy access to public or private transport to get them to a branch.

Hard-headed business types brand these branch closures as protecting the bottom line.

Those more interested in the social impact and concerned about "financial exclusion" might instead call it protecting profits from the poor.

Happily, the way that banks and other financial institutions treat low-income communities is under scrutiny. The Treasury Select Committee, led by the irrepressible John McFall, is investigating financial exclusion and whether banks fail the poor.

During a committee hearing last month, Citizens Advice attacked high-street banks for making it difficult for vulnerable customers to open "basic" accounts (usually the first step in encouraging members of deprived communities to join the mainstream finance world).

Many failed to display or offer account information, it said, and demanded evidence of identity such as passports that some people don't have.

Meanwhile, the Government's own Financial Inclusion Taskforce is spending £120m over the next two years to bring the estimated 2.8 million households without a bank account "in from the cold".

The Treasury is also holding a summit on the spread of ATMs that charge between £1.50 and £2 to withdraw your cash. It is concerned at the siting of these machines in deprived and low-income areas, particularly where post offices that offered free over-the-counter cash withdrawals are closing and high- street banks are pulling out.

For too long, Britain's great financial underclass has wrongly been ignored on the grounds of being "unprofitable".

As banks unveil fresh rounds of gargantuan earnings, it's time they spent more on low-income customers - to attract and then keep them with decent offers.

One day, these people will be profitable too.

s.dunn@independent.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Mortgage Advisor - OTE £95,000

    £40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

    SThree: Trainee Recruitment Consultant

    competitive: SThree: Are you passionate about sales?Do you have a keen interes...

    Recruitment Genius: Loan Adviser - OTE £30,000

    £17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Day In a Page

    Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

    Tribal gathering

    Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
    Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

    Gaza, a year on from Operation Protective Edge

    A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
    Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

    Illnesses, car crashes and suicides

    Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
    10 best trays

    Get carried away with 10 best trays

    Serve with ceremony on a tray chic carrier
    Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

    Team Murray firing on all cylinders for title assault

    Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
    Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

    Nick Bollettieri's Wimbledon Files

    Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
    Ashes 2015: Angus Fraser's top 10 moments from previous series'

    Angus Fraser's top 10 Ashes moments

    He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
    Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

    EU 'family' needs to forgive rather than punish an impoverished state

    An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
    Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

    Gaza, a year on from Operation Protective Edge

    The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
    How to survive electrical storms: What are the chances of being hit by lightning?

    Heavy weather

    What are the chances of being hit by lightning?
    World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

    World Bodypainting Festival 2015

    Bizarre and brilliant photos celebrate 'the body as art'
    alt-j: A private jet, a Mercury Prize and Latitude headliners

    Don't call us nerds

    Craig Mclean meets alt-j - the math-folk act who are flying high
    How to find gold: The Californian badlands, digging out crevasses and sifting sludge

    How to find gold

    Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
    Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

    Not born in the USA

    Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
    10 best balsamic vinegars

    10 best balsamic vinegars

    Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend