Independent Banking Advisory Service 

Banking News & UK Comment 2007

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Sir Richard Branson's Virgin Group is planning to take a majority stake in Northern Rock, so the BBC has learned. Virgin Money has for some time been interested in banking and mortgages. Is Northern Rock going to be the foundation on which Virgin Money builds? Is Northern Rock's mortgage portfolio Virgin's entry point into creating a bank of it's own - or is this another PR exercise whilst the Government continues to 'shore' Northern Rock up until the most palatable solution is found? As they say - you couldn't make it up, could you? 12.10.07

If the recent Northern Rock issue has done anything it has shown up deficiencies in our regulatory system. Whether Northern Rock can now survive without being 'broken up' will become evident in the short term. Northern Rock's exposure brought about by events starting in the USA shows how swiftly financial 'jitters' create waves which drown those who are most at risk.  Whether the FSA, Bank of England or indeed the Government ever thought they would witness a run on a bank in 2007 is not the point. The point is whether they have learnt anything from this event. We can only hope. 

Judges appear to have lost patience and banks are looking under pressure from consumers with more than 600 cases heard in Leeds alone. This represents a massive consumer revolt against bank profiteering from bank consumers sick of excuses and promises from regulators. Whilst regulators have been reluctant to enforce regulation, (despite having the ability to do so), consumers have shown that they do have the ability to hit banks where it hurts - 'in their pocket' - provided those consumers are 'shaped' into a large enough force and have a justified, legitimate and common aim.

Banks have enjoyed too much protection from Government. This has encouraged banks to continue their financial plundering of all banking consumers. We know how ruthless banks are when consumers are forced to face them alone. Consumers need to be equally as ruthless and keep asking for bank penalty fees back. The banks do not deserve sympathy for their ruthless profiteering or for building profits out of misery.

IBAS has stated clearly for more than fourteen years that there is no excuse for bank 'profiteering' - the penalty fees debate has shown that the banks are not confident that the law is on their side in this area. If the banks were confident of their position on 'penalty fees' they would have sought an early 'landmark' case to set a legal precedent in their favour. The fact that they have not been confident on that route demonstrates their growing problem in dealing with this specific issue.

This is just one of many such areas where profiteering by banks has been allowed for too long and IBAS has repeatedly requested Government to windfall tax banking because of that profiteering. However, Government has refused that option.

Consumers have now taken the opportunity presented to them and are reclaiming 'unfair' penalties in volume. Those penalties were in our opinion 'inflicted' on bank consumers by lenders purely for profit they would generate and for no other reason.

Fair, decent profit should be applauded by us all - equally unfair or indecent profit which is created by intentional and targeted profiteering should be abhorrant to us all. - Eddy Weatherill, Chief executive,  Independent Banking Advisory Service.

As the consumer penalty charge 'fight back' intensifies several new issues arise. 'Ambulance chasing' - 'no win, no fee' operators have moved in on what they see as a lucrative area for their plundering and the bank's are threatening to delay information which is required under the Data Protection Act - because they say they are unable to process the volume of applications now being received.