Julian Knight: Let’s have decisive action on banking and probate

(GETTY IMAGES)

I don’t know who it was who said that “a camel looks like a horse designed by committee”, but it sums up talking shops pretty well. Today, Which? has released its report into the future of banking, drawn up by, yes, a committee.

But this one includes real notables such as the Secretary of State for Business, Vince Cable; the Conservative MP David Davis; John McFall, Labour’s combative former head of the Treasury Select Committee; and Clare Spottiswoode, who took Aviva to task over its treatment of policyholders. But is this report a thoroughbred, or a mangy old dromedary?

There are parts I really like, such as calls for more clarity over the financial services compensation scheme – a living will for banks in case they go under; a ban on the over use in marketing of words such as “guaranteed”; and a degree of early intervention to prevent bubbles forming in asset markets – the idea of “taking away the punch bowl” to stop the party getting out of hand. These are all common sense, if not pretty well-worn.

But get to the specifics of how banks should treat their customers and then, I’m afraid, committee-itis does take over. Apparently regulators should “ensure banks do not take advantage of existing customers”. What does that actually mean? The example of banks offering different savings rates to old and new customers is used, but there is no specific call for this to be banned. And what about the pricing-for-risk of many lenders, and the banks’ disgraceful treatment of low-income customers?

Over bank charges, regulators are supposed to ensure “that customers with overdrafts are not overcharged”. Again, great, but with the Office of Fair Trading (OFT) case lost, is a regulator going to go there again? Many of the proposals are already in process, with commissions being ended, and greater transparency of product description, and action against someunfair terms is slowly taking place.

Overall, the report is skewed towards the regulation of banking to prevent another 2008 near-collapse. But it leaves the everyday experience of the consumer rather at the margins. Of course the big picture is massively important, and this report is very welcome and contains a lot of sense. But an opportunity to draw some real lines in the sand for consumers has been missed. The curse of the committee strikes again.

A will to change

ITC, the UK’s biggest provider of probate services – executing a will – which counts Barclays among its many clients, has said that in future it will automatically relinquish its right to be an executor of a will if the beneficiaries ask it to. This is a really important development in the fight for fairer treatment of the bereaved, which we have featured heavily in this newspaper. All too often, family and friends of the deceased are presented with a will naming a bank or a will-writing firm as an executor. These often then levy unjustified and exorbitant fees between 3 and 4 per cent of the total estate – more than twice what your family solicitor is likely to charge.

The firms, even when asked by relatives to stand aside, refuse to do so and insist on their fees. ITC shows that it cannot be categorised alongside these companies. Let us hope other big industry names follow suit. In a similar vein, my criticism last week of the new OFT-approved code of conduct for will-writing firms has caused consternation in the industry. The Institute of Professional Willwriters, which drew up the code, has been in touch to put its case. I recognise that the code is trying to do something to improve standards and could be seen as a first step towards better industry practices. But it doesn’t go far enough. For example, it only states that willwriting firms should not make it a “condition” of drawing up a will for clients that they are named as executors.

And the clause that all fees charged for acting as an executor have to be disclosed? Well, Ihave often found thatwhat is described as “disclosure” morphs into gobbledegook and hides in the small print. And, the institute admits it has just afifth of the industry as members (its code is even voluntary for them).

I’m sure it represents the best, but there are far too many cowboys out there, drawing up wills as a loss leader so that further down the line, once the testator is dead, they can crawl out and impose ridiculously high fees. If the Office of Fair Trading, under Britain’s highest-paid public servant, John Fingleton, wanted to stop the bereaved being ripped off it would make membership of the institute and adherence to the code compulsory. It would require will-writing firms, like lawyers, to provide an upfront rundown of fees, bar them naming themselves as executors (only acting if the client comes back to ask them to) and, for all wills already drawn up, make ITC’s position on stepping aside standard practice.