The Interview: The man who makes Moneybox go round

Peter McNamara, chairman Of Moneybox
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The Independent Online

Peter McNamara is not a terribly popular man with the public: he runs Moneybox, one of the cash machine operators accused of making excessive charges that discriminate against the poor.

Peter McNamara is not a terribly popular man with the public: he runs Moneybox, one of the cash machine operators accused of making excessive charges that discriminate against the poor.

This week the offending companies were lambasted by the Treasury Select Committee for raking in £140m a year from consumers who merely want to access their own money.

How does Mr McNamara, a former Lloyds banker with a first-class degree in bacteriology, feel about working in an industry that is so reviled?

Striking a defiant note, he says: "A lot of it is a high degree of exaggeration from some quarters. Less than four out of every 100 transactions on an ATM [automated teller machine] incurs a surcharge and that tends to get rather lost. The reality is that we provided 22,000 new outlets for people to gain access to cash and already have a very transparent charging arrangement which is probably the clearest you're likely to see in anything to do with financial services. There is no such clarity about the charges you get on an overdraft or a credit card borrowing or anything else."

Although unpopular with the public for charging up to £1.75 for a cash withdrawal at most of its 2,900 machines, Moneybox is not short of suitors in the City. Last week it revealed it had received bid approaches. Its bigger rival Cardpoint is believed to be leading the race with a 46p-a-share takeover offer, valuing it at £92m. But it will face tough competition from the US operator TRM, which has built a near 9 per cent stake in Moneybox since January.

For once, the banks, which provide free access to cash at their ATMs, are not being castigated by MPs. The villains are the independent operators including Moneybox, Cardpoint, Bank Machine, and Hanco, which has been acquired by Royal Bank of Scotland.

They have installed their generally brightly coloured ATMs in what is termed "convenience" locations such as shops, pubs and petrol stations. They pride themselves on going into areas where the banks will not go because they say it is too costly to run a free machine. From virtually none just five years ago, when Barclays tried but failed to start charging the customers of other banks for using its cashpoints, the number of charging machines has grown to more than one in three.

Mr McNamara suggests that Moneybox and other independent operators should actually be lauded for filling in the gap left by banks closing or selling off parts of their non-branch ATM estates. HBOS recently sold 816 cashpoints to Cardpoint, which plans to convert 250 to charging by September, raising fears that other banks will follow suit to save costs.

He maintains: "All we've introduced is a further degree of customer choice and in many cases the fee that we charge is far less expensive than the costs the customers would otherwise have to go to get hold of cash. I feel that we are performing an important duty and one which is often being neglected by the banks who've closed branches or ATMs in remote locations."

Because of the location of many of the charging cashpoints, there is a suspicion that the socially disadvantaged are paying the most. The fixed fee of usually £1.50 or £1.75 per withdrawal also puts those on low incomes at a disadvantage, because they tend to make more and smaller withdrawals. The inquiries made by the select committee have put a spotlight on these charges in recent months.

Striking back at the committee, Mr McNamara laments that its report did not go far enough in reforming Link, which runs the cash machine network in Britain and counts the banks as well as the independent ATM operators among its members. He failed in his campaign to make the banks pay towards the cost of running the charging machines, which he claims would enable the independent operators to lower their charges towards £1. He has also suggested waiving the fee for poorer people, as those on basic bank accounts could easily be identified when they use a cashpoint.

"We feel that the current arrangement isn't really in the interests of customers and even though we couldn't necessarily make those machines free, we could certainly reduce the cost of transactions," he says. "Our argument is that the banks ought to pay something towards the surcharging machines to lower the cost for the consumer."

The 54-year-old, who cites "gentle climbing" in the Scottish Highlands, motorcycles and cycling as his interests, spent 27 years working for Lloyds TSB. He was head of corporate strategy when Lloyds merged with TSB and Cheltenham & Gloucester, and spent four years as managing director of personal banking. He then joined Alliance & Leicester as group managing director, and in 2002 became chief executive of the Birmingham-based Wesleyan Assurance Society while also serving as non-executive chairman of Moneybox.

Last September, Mr McNamara stepped up to chairman, rescuing the company from crisis after a profits warning and the departure of Paul Stanley, the chief executive and founder of Moneybox. He fended off several takeover approaches, believed to have come from the US competitor TRM and major UK rivals, and set about reorganising the business. Costs were slashed by sacking 10 people from the management and renegotiating supplier contracts, putting the loss-making company on course to turn a profit this year. The group also operates a cashless system for pre-payment cards, which is seeing good growth. No wonder Moneybox has received fresh bid approaches.

Consolidation seems inevitable in the competitive and fragmented cash machine industry, which has grown from a couple of companies five years ago to about 12 now. The smaller operators are struggling to make a profit. This week Scott Tod admitted that several hundred of its 2,600 machines are not being used enough to pay their way after falling £98,000 into the red in its first half.

Unlike the other private operators, Moneybox also runs several hundred free ATMs for building societies.

In general, Mr McNamara welcomes the committee's proposals for the clear labelling of charging machines, to be implemented by July. Link has threatened to fine or even disconnect companies that do not put the required stickers on cash machines. However, he thinks that having a big warning sign on ATMs could be counter-productive. "The temptation is for all charging machines to charge the same fixed fee. It'll work contrary to what their intention was, which was to generate more competition and better prices, so I don't think that's necessarily a very clever outcome for the Treasury Select Committee," he says. After Scott Tod raised its charges from £1.50 to £1.75 this week, other private operators are likely to follow suit, he believes.

Unlike two of his directors, Andrew Neubauer and Vince Isaacs, who would pocket £15m between them from their shares in Moneybox if the Cardpoint bid succeeds, Mr McNamara would not gain much. He would only get £93,333 from share options. Asked why he chose to leave the banking world and join Moneybox, he says: "I've always had an interest in the ATM side of the world." He quips: "Unfortunately, I can remember the very first types of ATMs quite clearly when they were in operation."

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