Independent Banking Advisory Service

Business Banking

Trust in Banking and UK Financial Services

IBAS most recent views and comments at Banking News and UK Comment 2009

Daily Mail 04/09/2009 - Backtrack on banking: Why Lloyds needs to be smaller, by the Chancellor who gave it a £17bn bailout - Alistair Darling has been forced into a major rethink over bailed-out superbank Lloyds. The Chancellor last night suggested that he wanted to slim it down to reduce its dominance after admitting that the financial sector needs much more competition. It represents an extraordinary reversal given that Gordon Brown rode roughshod over competition rules in personally approving the merger of Lloyds and Halifax Bank of Scotland last September.

Liberal Democrat Treasury spokesman Lord Oakeshott said: 'The Government have been making the rules up as they go along in the banking crisis and now they have been found out. Gordon Brown was only too happy to do a cosy deal which ruined Lloyds, and now they suddenly appear to have changed their tune. 'They are lurching from crisis to crisis.' Eddy Weatherill, of the Independent Banking Advisory Service said: 'Unfortunately we are left with a giant which has not been through the proper competition channels. 'HBOS was handed to Lloyds on a plate. 'To correct that, the Government has now got to take the merger apart again.'

IBAS comment - Firm, transparent and effective regulation has always been the answer for better banking and also consumer confidence. It is also a 'given' that Government should not be able to alter regulation 'on a whim'. The failure to implement those points so far means the UK cannot recover as quickly from recession as otherwise might be the case and growth remains poor. Protecting the banking industry at any cost has been counter productive for Government and the 'bailed out' banks are well known for exploiting weakness in Government. It's good to see the Chancellor admitting to error in this matter, but we can only hope the Government will learn the lessons quickly, before any more costly mistakes are produced.

2007 ended with many bank customers asking "could 2008 be a really tough year?" The last few months of 2007 were historic in financial terms - so much went so badly wrong. We have all seen events which we never expected to happen. Everyone wonders what will happen next and more importantly, how will it affect them personally?

Many were already asking, "Do you trust your bank?" and "Can you trust the UK Financial services industry?" - Should you be more careful how you use UK banking services? Can you make better use of your money? How do you attempt to save for your future needs, or your retirement? Should we be looking at better or more ethical solutions?

Is profit for profit's sake really helping individuals towards a better future? - or is it an illusion created so that a few may prosper at the expense of the majority? Will it really be better and safer for your savings next year or the year after? Are the financial regulators really working effectively, or is that another 'safety net' that is holed? It's not only a question of trust now either - what about the mid term and long term prospects?

These are questions we should all be asking, as more, and ever increasing problems affect the financial services industry, not only in the UK, but throughout the world.

IBAS has seen the reputations of financial institutions diminish as their profits relentlessly increased for almost 15 years. Consumer’s opinion of these institutions is now at the lowest point ever, with profiteering at the root of one crisis after another. IBAS has continued to highlight financial issues and publicize the many attacks on UK consumers repeatedly ‘plundered’ by the big financial institutions.

It's natural you will want to know our 'pedigree' - visit UK Bank News 2009 for most recent Banking News and you will also find our national newspaper comments plus many more in the News and archives sections of our site - see our site map. IBAS has featured in BBC TV and ITV News items and programmes on banking and the banking issues many times since we were established in 1992.

Annual calculation of mortgage interest was exposed, Pensions ‘holes’ appeared, Endowments do not add up and some are now being compensated, Bank overcharging debit interest on overdrafts, loans and mortgages – further exposed, Underpayment of credit interest to savers, Penalty fees for overdrafts, loans, mortgages and credit cards - exposed as pure profiteering - and now being reclaimed by consumers in larger numbers. These are just a few of the financial ‘cons’ to which consumers have been forced to endure over many years at a substantial cost.

Personal Protection Insurance (or PPI as it is often known) has joined the long list of financial products miss-sold for profit. Many customers will seek repayment and compensation. Some businesses will have paid PPI for nothing in return.

Controversial payment protection insurance (PPI) should not be sold to a customer within 14 days of being sold a loan, the Competition Commission says. BBA has objected but customers have been ripped off for too long, vulnerable people most of all - one banking rip-off is closed down - at last - IBAS endorse the Competition Commission's actions - 13th November 2008

How can any industry get it so wrong? Motivation for all these financial services ‘cons’ appears to be greed. With continuous profiteering providing maximum profit whilst showing contempt for consumers. Consumers have suffered for far too long across a range of too many products, which means that 2007 may well be the turning point for a fair trading balance in financial products, which all consumers seek.

Consumers want good value and good service at a fair price. But, it is also correct that consumers have been slow to change financial suppliers, probably because they have been far too trusting. However, momentum is growing now and consumers will force changes on institutions which have caused so much pain.

Small Businesses have been forced to borrow at high rates from a small number of banks with even the SFLGS often dependent on the same banks administering and running that scheme, which perhaps accounts for the high failure rates.

At last, Regulators started to ‘flex their muscles’, thanks to the continued pressure from consumer groups and consumer articles over many years. Inevitably, consumers have forced change, because they are no longer accepting shoddy treatment and profiteering.

It seems the institutions have just gone too far and have 'ripped off' too many bank consumers. There isn't a family in the UK that can claim they are unaware of the problem or which has not been affected in some way by one of the financial 'cons'.

This consumer awareness has built huge mistrust in financial service products but it has also confused consumers - they just don’t know who they can trust anymore. But, this offers huge scope for new exciting social ‘concepts’ to grow and replace the cynical and profiteering dinosaurs, those who only want to ‘rip off’ consumers.

New social lending entities should now quickly broaden appeal to gain a larger share of the savings and borrowing market, simply because lender and borrower are being offered a fair price and also because it is transparent.

No doubt more social business entities, keen to provide a marketplace for lenders and borrowers at fair prices but without the mentality of profit for profit’s sake will join in. It’s been a long hard ‘road’ – but by making better and more informed ‘social’ choices, consumers will shape the new social businesses in which they can invest and also trust in for the future.

None of us should just accept what is on offer - we are all consumers and financial services should be a target area where all consumers should be questioning how it can be changed for the better. Written by Eddy Weatherill - Chief executive - Independent Banking Advisory Service

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Independent Banking Advisory Service (IBAS) is a national, independent, non-profit, unique specialist banking customer membership organization which resolves banking complaints and disputes and which has campaigned on UK Banking customer issues since 1992. We provide bank and banking assessment, analysis, bank comment and content for BBC TV News, ITV, Radio and national newspapers, keeping many serious banking issues 'alive'.