James Daley: Are banks being cut too much slack?
Saturday 19 July 2008
Watching the bank charges saga unfold over the past couple of years has been a bit like watching Derby County play football. You know they're going to lose, but rather than simply agreeing on a suitable scoreline with their unquestionably superior competitors, the referee insists on the humiliation being played out in front of thousands of people over a full 90 minutes.
Similarly, when it comes to the banks versus the Office of Fair Trading, it's never been in much doubt how it's all going to end: the banks will eventually be told they charge too much, and consumers will finally be allowed to start reclaiming the money they were unfairly charged. The only problem is that it may be years before the court cases are done and, more importantly, years before the Financial Services Authority finally drops its waiver that allows the banks to put all claims on hold for the moment.
This week, the OFT published yet another damning report, exposing the complexity and opacity of the banks' charges, and even threatening to force a new set of rules upon the industry if it doesn't clean its act up soon. To carry on my rather ropey football analogy, you could say it put another hat trick past the demoralised Derby County.
But at this stage, it doesn't really mean anything. We're only halfway through the match, and consumers won't be allowed to claim their victory until it's all over – possibly sometime in 2009, but more likely in 2010.
In the meantime, things appear to be only getting worse. Although a condition of the FSA's waiver was that banks should not be able to change their charges if their was any chance that any of their customers could be worse off, all of the main banks have brushed this aside and pushed ahead with a rehash of their fees over the past 18 months. While they may argue that their new charges are fairer, it's possible to identify scenarios with most of the banks where some of their customers will lose out – something that the FSA expressly said should not be allowed to happen.
Alliance & Leicester, for example, now charges its customers 50p a day for using their overdraft facility, rather than charging a regular rate of interest. Although this works out much cheaper for customers with large overdrafts, it's much more expensive for customers who only occasionally dip into the red by a few pounds. Similarly, Lloyds TSB now has a sliding charging structure for people who bust their overdraft limit – dependent on how much over they go. For some, the charges will work out much higher than they were under its old system.
As the OFT rightly said in its report, the many varied charging structures of the banks have made it all but impossible for consumers to make a straightforward comparison of who has the most reasonable fees. Until now, current accounts have been one of the few financial products that consumers haven't needed to take financial advice about– but if things carry on as they are, consumers will need professional help to navigate this market, too.
I can't help feeling that the FSA is deliberately cutting banks more slack than they deserve right now, because it needs to keep them onside. It has already persuaded the big players to help rescue Bradford & Bingley's ropey rights issue, and if the credit crunch prevails, it may well need their help again.
But these issues should not be related. The regulator's primary responsibility is to protect consumers. And when it comes to consumer banking, it's hard to argue that they're succeeding at the moment.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 2 Pope Francis issues top 10 tips for happiness – including don’t try to convert other people
- 4 Disney heiress Abigail disowns her share of family profits in West Bank company
- 5 Israel's propaganda machine is finally starting to misfire
The secret report that helps Israel hide facts
Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...
£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...
Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
Day In a Page
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000