Sam Dunn: If banks stop behaving badly, we can live with fees
Sunday 19 November 2006
Is free banking a right?
Probably not, but if banks and other providers have ever wanted to start a fair debate on the subject, they've blown that chance by behaving so badly.
Tired of being stung with high fees for accidental or tiny breaches of an overdraft or a missed payment, most people have clung to a free bank account as their one refuge.
It has also become a dangerous habit: ordinary current accounts have been free for more than two decades, and that contributes to our inertia in switching away from banks that don't serve us well.
First Direct's actions last week (see back page) attracted plenty of opprobrium but other banks will be weighing up such a move over the coming weeks.
In fairness, it costs banks a lot to set up an account, manage transactions, offer an overdraft - and look after your money. But if a move towards current account "management" fees gains momentum, the very least to ask for is transparency.
As long as "basic" bank accounts remain free for those on low incomes - and I'm convinced the Financial Inclusion Task Force will ensure this - then I don't think too many people would object to a small fee.
Heat on British Gas
"The ads should not be published again in those forms unless there is sufficient substantiation to back up the claims made."
This unwieldy slice of bureaucratic language closed an adjudication made last week by the Advertising Standards Authority (ASA).
Following on from a recent outburst by John McFall, chairman of the Treasury Select Committee, on the potential danger of misleading claims for financial services products, step forward British Gas.
The giant utility has been publicly rebuked for having claimed that every 60 seconds someone switched back to it for their energy supply (see News, page 22).
Thanks to complaints from the public and rival suppliers, it transpired that the claim was based on figures that also included consumers who had not been with British Gas before.
How could such an erroneous claim ever make it into an ad?
British Gas says it received guidance from the Committee of Advertising Practice (CAP), which advises on the copy used in ads, and got the approval of the Broadcast Advertising Clearance Centre (BACC).
The company had initially said its claim was founded on an assumption that, since it used to be a monopoly, all gas customers had been with it once.
It stands by this but says the point is hard to prove.
"We still think it's a truth. We only keep customer records for a certain amount of time, and we cannot trawl through the hundreds of thousands of consumers who switch every year," a spokesman explains.
Perhaps unsurprisingly, the authorities took a different view.
The ASA says it is happy with the way in which companies present their plans for adverts via the CAP and BACC, and that the two bodies stop huge numbers of misleading ads getting through. But occasionally, it adds, ads will slip through the net.
So we then have to rely on the vigilance of the public and, of course, rival companies.
Intriguingly, only one member of the public was listed by the ASA as having phoned up to complain about the British Gas ad. After totting up the figures implied by the claim, he "believed [it to be] an exaggeration", the ASA said.
We need more people like this acting as lookouts, taking the time to reconsider an advert and ask, "Can that really be the case?"
Whenever you hear a claim or suggestion that sounds even slightly exaggerated, do call the ASA on 020 7492 2222.
If it's specifically to do with a financial product, try the Financial Services Authority hotline on 0845 730 0168.
The more pressure on companies, the better: the old adage about giving an inch and taking a mile still stands today.
Coffee without cash
Starbucks is doing its bit to encourage us to do away with cash.
Last week, in hundreds of its coffee houses across the UK, the company launched the Starbucks card - an import from the US, where the chain has 10 million customers using them.
You can load up any sum between £2 and £150 and simply run this down and reload when empty; if the card is stolen, you can cancel it immediately and get a replacement for free.
Busy customers, Starbucks says, will benefit from spending less time at the till; they will also be able to use the card abroad in the US, Thailand and Canada (at no cost to the consumer, the company adds).
Of course, Starbucks gets something too. Busy commuters - a key market - can pass more swiftly through its stores, encouraging more customers to visit at peak times.
The card should free up Starbucks staff to engage in more productive jobs if they no longer have to handle so much cash.
Stories of an imminent cashless society regularly do the rounds but it's just this kind of card creep that is likely to hasten its arrival.
Our national obsession with caffeine doesn't look like waning any time soon, and the cards don't carry any charges.
One obstacle might slow down the progress of this plastic, though: a limit to wallet space.
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