Devious banks bend the rules

IT'S NOT just bank customers who believe that banks are ruthless, devious set-ups designed to part them from as much of their cash as possible by fair means or foul.

The Director-General of Fair Trading, Sir Bryan Carsberg, delivered his opinion on the workings of the 16- month-old Banking Code last week, and the remarks were not exactly complimentary.

He accused them of bending the rules to get around the confidentiality clause which prevents the names and details of banking customers from being passed to their life insurance salesmen.

Only Lloyds Bank asks permission. Barclays has started to make it a condition of signing up for any new service that assent is given to pass information around all corners of the bank. So no permission, no Barclaycard. Midland has settled for a 'negative option' - if you don't tick the box you are deemed to have agreed - while NatWest employs its life insurance salesmen directly, so they have access to the information anyway.

Sir Bryan wants to see 'strong action' on this front. But he also wants to see the ideal that customers are entitled to 'best advice' extended from investments covered by the Financial Services Act to all banks' activities.

So banks would have to weigh the merits of life insurance-based investments, which yield them a juicy commission, and simple deposit- style accounts; and between repayment loans and endowments, which again bring hefty commissions. Simple products usually offer the best deal - but the least profit to the bank or building society.

This vision could so easily be turned on its head. Salesmen who have to weigh up the merits of the two kinds of home loans or savings schemes will say they have to present both cases, and Sir Bryan's good intentions could be perverted.

He wants both watertight Chinese walls to keep the marauding insurance salesmen away from banking customers who do not want to deal with them, and at the same time wants to force the banks to weigh up all courses of action when taking a customer through a decision.

He probably cannot have it both ways, and should insist firmly on the right of customers to privacy, and freedom from sales-patter, even if this means sacrificing the admirable aim of trying to unhook more people from the commission-driven sales push.

WORLD in Action will pose the question tomorrow: 'Why are building societies still recommending endowment mortgages when they no longer offer any certainty that they will build up enough to repay the loan?' The answer, of course, is 'Commission'.

THE Advocate-General of the European Court of Justice, Walter van Gerven, delivered judgement on a case involving Mrs Friedel Roberts and her employer, Birds Eye Walls, last week.

This ruled that unequal payments to men and women designed to iron out differences in state pensions are legal. In this case, a bridging pension was paid to employees forced to retire early on grounds of ill-health. This was reduced by the amount of the state pension when it became due.

As the state treats men as retiring at 65 and women at 60, this meant that the payment to Mrs Roberts was cut on her 60th birthday, whereas if she had been a man, the payments would have continued for another five years. Or, to put it another way: two wrongs do make a right.

In a mad world, this is not a completely unreasonable view. But what was profoundly depressing was that through his judgment, the Advocate-General referred to the employer as 'he'.

THE best no-lose punt of the week is to put some money into a Cheltenham & Gloucester Building Society Account that carries membership of the society.

The C&G, which is the sleekest of the bunch with low overheads and a usefully well-heeled client base, is embarking on a series of TV and press ads, for the first time.

It may be true, as the society claims, that it is all about getting its name better known. But it is also possible that this is a prelude to becoming the first society to follow the Abbey National in converting from a mutually owned building society into a public company.

The rate paid by its flagship postal London Share account, a flat rate of 6.25 per cent gross - has slipped from the top-paying league. But it is still a reasonable place to park money if it means reserving space in a possible shares share-out.