Jason Nissé: Pity the poor Royal Bank customers who've been kebabed in St Abbs

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The Independent Online

The West Lothian question was raised by the Labour MP Tam Dalyell when talking about Scottish devolution. How can the member for West Lothian vote on issues concerning West Bromwich when the member for West Bromwich cannot vote on issues concerning West Lothian?

After the Chancellor's action following the Competition Commission report into small business banking, we can now add the St Abbs question. How can the charges levied on accounts at the Royal Bank of Scotland branch in St Abbs be OK, when the same charges on accounts at the Royal Bank branch in Berwick-upon-Tweed, a few miles down the Lothian coast, are against the public interest?

The answer is that St Abbs is in Scotland and Berwick is in England. According to the Competition Commission, the Scottish and Northern Irish markets (where only three banks compete) is competitive, while the English and Wales market (where there are four big banks and two hungry new entrants) isn't.

The Treasury could not give me an answer. Royal Bank of Scotland and HBOS, which operate on both sides of the border, were bemused. And Derek Morris, chairman of the Competition Commission, could only justify the differential by saying that Scottish business customers tend to keep less money in their current accounts than their English counterparts.

I'm not hear to defend the big banks – I have withdrawn my business from both NatWest and Lloyds TSB in disgust in the past – but I can't see why the Government should intervene because customers are not being canny enough. The Government does not try to stop people making bad business decisions at other times. Indeed its bankruptcy reforms appear to be aimed at rewarding those who try and fail, regardless of whether they are unlucky or stupid or even crooked.

Few of us would not be in favour of turning the thumbscrews on the banks. Make them disclose all their charges. Have a panel of average Joes to vet all banking documents to see if they are comprehensible. Name and shame them as often as is necessary without becoming boring. But do not try and set prices. And certainly do not set prices in one part of the nation when you are happy to allow market forces to work in another.

Slip sliding away

The BBC News used the Maryland market as an example of good small business banking last week – without mentioning Allfirst. It is easy to forget that at the heart of the Allied Irish Banks scandal is a community bank servicing a city the size of Greater Manchester.

This makes it amazing that the Rusnak scandal could have happened, and all the more astonishing that it could have gone undetected for over four years.

The 57-page report by Eugene Ludwig is not bad for a rush job. But it leaves so many questions unanswered. Why were the rogue trader John Rusnak and his supervisor David Cronin allowed so much freedom when they had a reputation for volatile behaviour and a poor record of profitability? Why did AIB chief executive Michael Buckley phone Mr Cronin directly when he heard a rumour about overtrading, so leapfrogging both the AIB treasurer and the Allfirst chief executive? Why did Allfirst balk at paying $10,000 for software that would have tracked Mr Rusnak's trading positions? And what is the truth about the Bank of America warning last March, which the US bank says it gave but AIB has no record of?

AIB will this week bow to pressure from investors and force Susan Keating to resign from her post as Allfirst chief executive. If, as the bank has maintained, her position in the chain of command was circumvented, this leaves Mr Buckley rather exposed. His argument is that he inherited this situation, coming in as chief executive last year, and if Mr Cronin had not misled him, Mr Buckley would have been able to stop the rot nine months and $200m earlier.

This should save him for the moment. But no one at AIB is further than one slip from the exit.