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How would you improve banking services?

Bank charges

The CMA has issued its possible remedies for retail banking, but we’re not convinced it has gone far enough. So how would you improve banking for customers?

Back in February we launched our Better Banks campaign. Part of the reason behind our campaign was that we felt the Competition and Market Authority’s (CMA) banking inquiry was failing to address some of the big issues – notably around overdraft charges. Well the CMA issued a supplemental notice of possible remedies for retail banking on 7 March, but we think they still fail to hit the mark.

From the stories you’ve shared with us about your banking experiences, the picture is quite clear: banks aren’t doing enough to support their customers.

Eye-watering overdraft charges

As C.H.DWYER pointed out, bank charges can be particularly punishing for customers, even for the tiniest slips into the red:

‘I have not needed an overdraft for a number of years but I do think banks are charging punitive amounts for being slightly overdrawn. Matters are worse if you do not check your bank accounts daily to see immediately that you are overdrawn.’

Pam Quelch explained to us how these charges can be the start of a snowballing debt, and an unnecessary worry for her student daughter:

‘My daughter is a first year university student and has been using her overdraft and went a little over, the bank was going to charge her £10 per day. It’s ridiculous as then you just get further into debt.’

For Calchan, the charge without warning seems unfair, and hardly the practice of a customer service industry:

‘In this day and age it should be possible to send an email or text alert to allow say 24 hours to rectify the situation rather than just slapping a charge on. My children have only slipped up once but it was a painful experience for them. Banks need to be more nuanced and genuinely customer focused in what they offer.’

It would seem that banks just aren’t doing enough to support overdraft users, like Simon:

‘Customers are penalised by banks when they should have been more circumspect with their lending in the first place. I got overdrawn but they now refuse to help me out by not changing this into a loan that I could pay off in six years. The money saved in overdraft charges would have paid the loan off. Instead I am faced with several more years of debt before I can clear this.’

And, as illustrated by Mike’s story, the bottom line is that overdraft charges generate a lot of revenue for the banks:

‘My bank also charged me £30 per day for being overdrawn for just £2 for a total of 20 days. Then they also charged me with an unauthorised overdraft of another £30+ interest! Total cost nearly £1000 which was more than my wages! So kept getting charged every month!’

Finding a solution

It appears that the CMA agrees with the issues we’ve raised regarding overdrafts, but it has only listened to us to an extent.

Some of the suggested remedies are a step in the right direction. Requiring banks to give their customers more alerts, prompts, buffer zones and grace periods to help them manage their money and avoid overdraft charges, are all good suggestions.

But the CMA still seems reluctant to take action to control unfair, punitive charges faced by unauthorised overdraft users. And if these charges stay high, generating significant revenue for the banks, then we need to question how incentivised are the banks going to be to help their customers avoid them?

So what do you think needs to be done to improve banking services?


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“real money” doesn’t exist – cheap steel coins and paper or plastic have no intrinsic value. You would have to look to gold and silver in that they had real uses other than legal tender – as long as their was a need for those precious metals. So we use tokens; they might as well be electronic as printed. The only real “money” is in physical assets, carefully chosen to continually become scarcer. I do take the point about keeping your tokens under the floorboards. Hope for no house fires and don’t forget about it when you move (wavechange – a reminder 🙂 ).

Hidden underneath the floorboards of my late mother-in-law’s house was a stash of Royal Arsenal Cooperative Society dividend tokens – little tin or brass ‘coins’ which could be redeemed for cash. They were issued in proportion to the amount spent in the stores [like Clubcard or Nectar points today]. Not specie, or treasure trove, but an interesting find none the less.

It is true that modern methods such as Direct Debits and the Internet have contributed to the “cashless society”, but is this not more convenient for all of us. Would you really like to queue in any establishment to draw cash, then to have to take it to physically pay your Gas/Electricity supplier? The fact that money has become virtual has heightened security, with smaller amounts being carried by us and by Security Carriers. This has helped to reduce the total cost of cash handling compared to what it would otherwise have been. The balance in your account still belongs to you!

Duncan Lucas, I agree completely! Another banking scam is the conversion of currency and transmitting it to another country! My bank used to gain on the conversion by offering a poorer exchange rate, then charge £25 per transaction to transfer to a bank account in another country, despite the fact that I transferred it regularly!
I researched other ways to do it and PayPal and the Post Office do not charge for the service at all, though they may make some money on the exchange – a much better deal!
Banks are a rip off!

Folk have been complaining about currency charges for some while now:

Matthew 21:12-13King James Version (KJV)

12 And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves,

13 And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves.

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Now that most employees and pensioners are on monthly pay the banks are accumulating vast dollops of money long before it is drawn against. This has been quietly building up over the last three decades as weekly pay and payment in cash have faded into the background. The overwhelming majority of customers probably don’t run a regular overdraft so since almost everyone has a high street bank account these days the banks are sitting on more money than they know what to do with at times. I think it’s time they cut us all a little slack and handed out some carrots to reward us for our loyalty and tolerance.

I remain of the view that taking unauthorised overdrafts is wrong so I cannot agree with the view in the Intro that the charges for that are unfair. I agree they are punitive but rightly so in my opinion.

I expect most banks consider that they have acquired customers they would rather not have. This might condition their approach to charges.

As a matter of interest, why is that those of us who use a high street bank are ‘customers’ but those who use an off-shore bank or some other financial institution are ‘clients’ ?

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I wasn’t thinking of billionaires, or even millionaires, Duncan. People with just a few tens of thousands resort to extra-territorial investments through our high street banks [like in Jersey] because they are fed up with the poor returns at home. It doesn’t necessarily have anything to do with tax minimisation or secrecy, just a better way to make an inheritance or a windfall, or your life’s savings or pension pot, work harder for you. It sounds alright to me but through the curse of envy it seems to be frowned upon now.

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The Channel Islands are no longer an off shore tax free avoidance they once were
There was an amnesty a number of years ago and many folk with a few 10s of K got to pay backdated tax on their previously tax free earnings
The back tax payments were pretty stiff and there was no negotiating allowed. . .Flat rates
You’ll not have to go far to find someone caught out by the then measures
No one is complaining about where one banks or invest’s it’s the tax avoidance that we dont like. . .
If one has to pay tax all should be treated the same
The Channel Island thing happened a few years ago now and those people are livid at the idea that whilst they had to pay back tax there were deliberate loopholes left for the super rich
The guy who worked in Saudi or wherever and paid tax there and never brought the money into the UK proper ended up paying on the interest/dividends
Even the caper of negotiating with HMRC because your a Big Boy is also distasteful for many if not near everyone on the street

I thought the whole point of the Prime Minister’s disclosures was they show that he has paid tax on his income in full, as required. If that had not been the case I doubt he would have revealed it. We knew all along he was well-off so this doesn’t add much to our knowledge. All the Prime Ministers I can remember have had a secure financial background. I think there is a lot to be said for it.

Yes DeeKay – aggressive tax avoidance has now been outlawed and through international cooperation there is a lot more information available to the HMRC than there ever was before.

I am against loopholes – the Treasury and HMRC should be closing these as quickly as they discover them. Taking advantage of their inside knowledge of the UK tax system some of the top accountancy firms who advise the government are alleged to have assisted some of their UK clients to shelter their assets and incomes via their operations in other jurisdictions. But all these dodges are getting penetrated now and I am sure there will be more leaks from law firms and the tax havens. I think there must be quite a number of very worried people out there.

Following the Panama leaks a number of big names have been in the papers but there are thousands upon thousands of other people who the authorities will now invite in for a coffee and a confession. If they have done anything illegal I hope it will be possible to name them and penalise them. I am not against negotiating with tax debtors if the alternative is an impossible court case that would tie up tax officers for years and cost a fortune to mount – that would unduly enrich the legal profession.

There must still be some financial advantages in investing in Channel Island-type banks and funds otherwise they would die on their feet as investors went elsewhere. I think it is greed that propels people in those directions; I think that was the primary motivation for the thousands of retired people who put their entire life savings in Barlow Clowes investments. That outfit was wound up around thirty years ago following financial collapse due to fraud. The personal clients initially lost the lot but the government was forced to compensate them in the end for most of their losses at a cost of £150m [probably worth double in today’s money].

We just don’t know how many of those who bank offshore are avoiding tax that they should be paying, and how much revenue is being lost as a result. Even with a crack-down, the money won’t all come home – it will be creatively converted into some other vehicle.

I suppose everyone who had a deposit box at the Hatton Garden vault that was not touched during the burglary one year ago has by now recovered the contents, but I wonder what they have done with them. It wasn’t all the stock-in-trade of working jewellers and it is possible that many of the depositors whose boxes were raided have preferred not to come forward with a claim.

Luckily I have none of these worries and can sleep soundly at night.

Anthony Wilson says:
10 April 2016

There’s little that can be done to banks that will make a massive difference to ordinary account holders. Whatever is implemented in the name of “fairness” they will recoup in another area thus making “unfairness” in that. Its the way of the world

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We must draw a distinction between tax avoidance and tax evasion. Or perhaps we should ban tax avoidance on cash and stocks and shares ISAs, tax relief on pension contributions, the first £1000 of interest tax free, contribution to help-to-buy (well, its taxpayers money being given away that could have gone to low-income pensioners), and so on. If something is legal why should any of us not take advantage of it? Or is it because some people do have the modest income and wealth to use these concessions that others without the means object?

Personally I would do away with all concessions and all pay on the same basis. Many of them simply distort the market. The accountants may squeal though.

Tax evasion is a criminal act. Tax avoidance has always been the taxpayer’s right within the legal parameters and if honestly done. This is responsible tax planning which encompasses the things you mention Malcolm. The waters were muddied a few years ago with references to “aggressive tax avoidance” which seems to be creative accountancy schemes which, while not specifically illegal at the outset, are designed to have the effect of restricting the availability of significant revenue to the tax authorities through various manipulations and transfers. [That’s my guess as to the meaning, not an official definition.]

Each tax relief or concession on its own had a purpose and a target. What has developed over the years is a cat’s cradle of interlocking allowances and exemptions with all manner of qualifications and thresholds which keep the accountants juggling and concocting new by-passes.

I wouldn’t go so far as Malcolm and suggest getting rid of all the tax breaks – they do make life simpler for a vast number of taxpayers. And having an ISA is not tax avoidance – it is a tax-free savings product so no avoidance is involved. It is prudent financial planning to take advantage of such provisions where opportunities exist and it is a pity that simple financial advice for customers on how to make the best use of money and savings products is now hedged about with so many limitations on what the staff behind the counter can say to you [although the reasons for such controls are understandable in light of the miss-selling that went on].

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As consumers, we have tremendous buying power in a free market – we can often get what we want. Most of us want – and get – “free banking”. But what does “free” really mean here?

I get free banking because I stay in credit. I’m not paying directly for any of the banks staff or infrastructure that I employ. But somehow, all of things do get paid for.

My guess is that overdraft charges and penalties are one of the the main ways (if not the main way) in which the costs of providing current accounts are funded.

If we all managed to stay in credit, then the banks would have to find another way of charging us for the costs of running our accounts. If interest rates were high, they might easily cover it by lending out deposits at high interest rates.

In its various forms, money lending, is how banks make money. But we can exercise some choice over how much we pay to borrow money and where we borrow if from.

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Why does anyone Need an overdraft .If you budget carefully and do not spend beyond your means you might need a little more money very occasionally..If you need to borrow at all you should be able to get a loan Easy credit is the bane of the modern world.

Absolutely right Bishbut – in fact a personal loan would usually be cheaper than an overdraft so long as the repayments are maintained. To the extent that an overdraft operates in an offset manner against any credits in the current account it can be better value over the short term for a specific item of expenditure, and possibly better than using a cedit card, in which case an authorised overdraft is the answer. Any credit requires diligent management to avoid escalation.

If, overall, your income is not less than your expenditure, an arranged overdraft facility can be useful. For example if the timing of outgoing payments does not coincide with income in a month, say, a temporary loan (overdraft) fills the short term gap. You may also find an unexpected payment is required – fixing your car say – for which you have the means but maybe not immediately accessible; so again an overdraft will bridge the gap. Probably the simplest, most convenient and cheapest form of very short term loan.

If your expenditure always exceeds your income you need to deal with your financial affairs responsibly, and make a budget. Overdrafts, credit cards and loans are not the long term (or even medium term) answer.

I think a lot of current accounts are deliberately set up so that many customers cannot easily manage their money.

This, of course, makes it hard for them to avoid unintended overdrafts and makes it easy for the banks to charge them penalties and other fees.

It seems obvious to me that any such arrangements are skewed in favour of the banks – not the customers.

Life would be simpler and less painful for many customers if the banks only allowed them access to their own money and did not let them go overdrawn. Most savings accounts do only work that way, but current accounts all seem to be set up so that folks can easily end up in debt.

In order to improve banking services, I have my own experiences and opinions on this. I would split the issue down into 5 aspects:-
1. Fractional Reserve Banking.
2. Ethical lending
3. Unethical lending, i.e. Payday Lenders.
4. Credit reporting and scoring.
5. Nationalisation of essential public services.
6. Community offers and services.

Fractional Reserve Banking

I would like to understand more about what Fractional Reserve banking is, how it applies to private investment banks, what safeguards are in place to prevent withdrawal of funds in excess of that currently held in vaults, how it is enforced and regulated, what reporting processes are in place for those with concerns of fraudulent use, who regulates this system, and what improvements can be made to the current Fractional Reserve Banking System.

This was posed to me by someone else with concerns about the system, so I would like to understand more so I can provide a concise response the next time I am asked.

Ethical Lending

I include an extract from a letter previously about loan and overdraft aspects with Lloyds Bank plc:-

“I write with reference to a complaint with the Financial Ombudsman about Lloyds Bank plc, FOS reference 1643-4875/AD/CD11, action fraud reference NFRC150200928921. Please note the following:-

Loan Aspect
I should never have been put in a position where I resort to the continuing taking out of loans , and subsequent consolidation those debts to which this bank loan would have been taken out for. Credit should be offered to all citizens by reputable firms, e.g. banks, based on ability to repay, affordability taking into account all of the individuals outgoings, ambitions and income. Organisations should look at other methods of which the individual can obtain additional credit such as the employer paying more for increased responsibility, second jobs, and/pr setting up of own business (IN01 template attached), in order to realise the individuals ideas and aspirations. We all need to help each other, only then can we build a better world, where we all rise to super stardom forming long-term adult sexual relationships as appropriate.

Overdraft Aspect
I think you will find that I didn’t actually have an overdraft facility, and this aspect is a creation of the bank with unauthorised charges of interest, etc.

Points of Contention
1. Moving from one organisation to another is how money laundering presents itself, e.g. selling of these two debt aspects to Wescot Credit Services and 1st Credit could be seen as a way to disguise unorthodox practices. Prove to me absolutely that no money laundering is going on.
2. Mis-selling of a loan without proper process of affordability, etc, and then expecting an individual who can no longer afford to repay to honour the original agreement (even if said agreement was inappropriately sold) is wrong. This could also be construed as financial abuse, coercive control, i.e. attempting to control an individual by restriction of financial resources, etc.
3. Please note the going rate for an engineer of my standing is around £36k, I earn £25K. I am well underpaid for what i do, and for what I am qualified to do.
4. All of the changes proposed in this letter are required with immediate effect in order to maintain a very high standard of moral and ethical conduct to the provision of living wage and appropriate credit.”

As of around 2010, I changed my banking from Lloyds Bank to Natwest. I am very happy with customer services received from Natwest.

Unethical Lending, i.e. Payday Lenders

I include an extract from my draft final report document number MMCN0195 titled “Stop Trafficking and Exploitation of Women, Children and Vulnerable Adults” subtitled “The Natural Abolition of Prostitution and the Protection of Responsible Adults, Young Children and Vulnerable (Protected) Persons.” This report includes a scheme called the “Community Rehabilitation Improvement Scheme for the Path to Super-Stardom” which is regulated properly could really help people to look after themselves.

“Stage 3 – Debt Management & Payday Loan Industry, Financial Ombudsman, Ministry of Justice and Office of Fair Trading

The Financial Ombudsman will be used to monitor this ensuring that creditors abide by the programme and do not continue to pester the individual for payment adding undue stress.
The existing debt management industry will be rebranded as Lifestyle Management.
All debt management companies are encouraged to transfer all their existing customers to the “I want a life” programme, all they will have to do is purchase the spreadsheet management tool for £155 inc VAT for each of their customers, and promote the scheme to as many new customers as possible. Please note that the £155 charge is a one-off fee per customer, a bulk buy purchase can be arranged on request by any Debt Management company to the organisation running the scheme. The Debt Management companies job will be to promote the scheme, and provide any assistance and advice to customers of the “I want a life” scheme. The Debt Management companies will be paid out of the event marketing budget for their services.
Payday Loan companies are encouraged not to lend irresponsibly as well as reviewing their interest rates, e.g. 1000’s of % in interest is absurd and frankly obscene. Instead they should use their funds to help the newly branded Lifestyle Management business to grow and be able to support individuals who need help.”

Credit Reporting and Scoring

Now, I work very closely with Experian as part of my Credit Expert membership to manage my finances albeit not being paid enough for my grade, role and responsibilities. I pay £14.99 per month for this extra level of service such as instant email and text alerts when changes are detected on my credit report, alerts when sensitive personal data about me is detected on public databases. You may ask “why pay £15 a month when you can a standard report anytime for £2?” well, that’s a good question and to be honest, this level of protection should be given to everyone as a safeguard by a publically owned banking system.

Nationalisation of Essential Public Services

I believe there should be 12 essential public services, run for the good of the people, not for profit:-

Governance (including banking and financial sector)
Health Service
Employment Service
National Defence
Law Enforcement and Emergency Services
Security Services
Transport, Immigration and Infrastructure
Arts and Entertainment
Heritage and the Environment

I believe the Governance should include the running of the banking and financial system.

Community Offers and Services

Natwest, in my opinion, provide a good level of service and listen to their customers, for example the offering of the Help to Buy ISA scheme is really good, and one I intend to take up.
Banks and financial organisations must listen to their customers needs such as special mortgage requirements.
What I especially like about the Help to Buy ISA scheme from Natwest, is that it comes following a proposal written by me for a special mortgage deal (ref MMCN0196 Special Mortgage Deal) where the government put in 25% if the customer puts in enough of their own money. It’s a really good start, and other banks can learn from Natwest.
This special mortgage deal I wrote also include a scheme known as the RTH (Route to Home Ownership) Pathway:-

The RTH pathway will follow the process below:-
1. Tenant pays an amount per month to cover mortgage payments (if property subject to a
mortgage). Government subsidises these payments with a 25% Government bond.
2. An equal amount to that paid for mortgage payments is paid into a Secure High Interest
Investment Scheme, which after a period of 2 years should be at a level to cover a 5% deposit
on purchase of the property.
3. Monthly and annual statements issued to tenant on the current state of the Secure High
Interest Investment Scheme (SHIIS) and the RTH pathway.
4. Once trigger level of SHIIS reach, i.e. enough funds to cover 5% deposit, initiate proceedings
to issue document pack of what the stage will be if wishing to proceed with purchase.
5. Once final trigger level is reached, i.e. enough funds for deposit, fees, etc, initate proceedings
for transfer of ownership via mortgage provider to tenant.

Stop automated calls passing you from button to button. It would be better to speak directly to your own bank.

Mad says:
16 April 2016

I think they stink, they could exercise their authority. For Every voiceless silent customer critic. And those who are burdened by charges for a hectic banking lifestyle…which is most who have retail bank accounts…no one has money that just sits in the bank…no one can, and I’m no one! Point the mentioned authority agree but sit on fat lazy cushy job a***s.
Do nothing then?

My problem with my building society/bank is one of accessibility. I am profoundly deaf and cannot use the telephone. The only way I can make contact with the organisation in an emergency (loss of bank card etc) is to find someone to call on my behalf, thereby disclosing my personal financial information to neighbours etc, which I feel leaves my confidentiality breached. Should any problem occur in the future with fraud etc in respect of my account, it also exposes whoever makes the call for me to possible suspicion.

The only other method of contact is via the secure email system on the internet banking website, which does not produce immediate results and can take some days.

Despite my repeated requests for some other form of contact, the organisation refuses to provide this help. With 1 in 6 people having a hearing loss, there is a great need for all organisations to provide other methods of contact for this vast group of people (9 million). Even with a mild hearing loss, it is easy to misunderstand and numbers especially can be incredibly difficult to hear correctly.

This is a problem which is regularly raises its head and is discussed on the social media “deaf group forums” etc and the word quickly gets around as to which organisations are “deaf friendly”.

It’s a disability problem surely some one could try a test case?

I have seen a comment about a Video Relay Server service that some banks offer. This may help even if it means changing banks? Presumably it is most easily used if you communicate by sign language, but written communication might be a possibility? Have you come across this?

When I was younger there was a bank in Birmingham called the Municipal, which was owned by the council,unfortunatly this was taken over by the TSB,I would like to think the councils of this country could restart local banks,to give help to local buisnesses with loans, and people could have cheap mortgages.This would keep money in a local area, helping councils financially in hard times like we are going though at the moment

sidneystratton says:
25 April 2016

Have the ‘top’ third of the management sent to work in Siberian salt mines.

Punitive penalties for slight overdrafts are ridiculous! Don’t personally have an overdrafts and it’s many years since I did, but they were bad then and they are worse now! Stop massive bonus payments to the banking higher echelon and use the money to eliminate or drastically reduce overdraft penalties!

There are no penalties for arranged overdrafts. If people qualify, that is what they should do – arrange an overdraft facility. If they do not qualify and the bank considers them a bad risk, or if they simply cannot be bothered to make an arrangement with their bank, then there should be a deterrent. What is ridiculous when the remedy is so simple, and all you are being asked to do is to behave responsibly, ?

A lot of banking fraud takes place by tranfering money into an account, withdrawing it quickly and running off with the cash. How did they open an account in the 1st place? What checks were done by the banks?