/ Money

Can the CMA’s banking remedies deliver better banking?

Bank fix

After a near two-year-long probe into the banking sector, the Competition and Markets Authority has today published its proposals to shake up banking. But will it be enough?

The Competition and Markets Authority (CMA) has today recognised that the ‘big four’ banks – Lloyds Banking Group, HSBC, Barclays and Royal Bank of Scotland – dominate the market, and consumers aren’t switching. In summary, the banking sector isn’t working for all consumers, and a shake-up is long overdue. So what’s the CMA’s fix for this?

CMA banking remedies

Broadly speaking, today’s proposals includes some welcome news for the more than 50,000 supporters who’ve backed our Better Banks campaign.

In a win for our campaign, the CMA has laid out plans to ensure banks do more to help people manage their money. We called on the CMA to introduce alerts for overdraft usage and grace periods to help people avoid charges – and the CMA has done just that.

A revolution in mobile banking to promote better and easier switching is the big news from the CMA’s proposals.

The new ‘open banking’ standard will aim to deliver the same services on smartphones as those found in high street branches. Applying for loans, overdrafts and mortgages should all be available via mobile phone, as well as being able to transfer money between accounts.

The aim of this proposal is to pave the way for new services that are better tailored to individual needs – for example, using a mobile phone app to manage accounts held with different providers and compare better deals based on banking usage.

You should be able to access the details of your entire finances through a mobile phone app by 2018. The CMA believes this will encourage more people to switch to better deals, but concerns have been expressed today about potential security issues.

Unarranged overdraft charges

Missing from today’s remedies were strong plans to directly tackle high unarranged overdraft charges.

While the CMA will require banks to set a limit on their charges, the proposal will allow banks to set this limit themselves. It will allow banks to continue to impose charges that can cost as much as a payday loan.

These charges remain problematic for consumers. Last month, we asked you here on Which? Conversation ‘Do you know how much your overdraft fees are?’ The majority told us they didn’t – 45% said ‘No, I have no idea what the cost would be’ and 20% said they weren’t sure. Only 36% said they knew exactly what the charge would be.

As Kim Marie explained to us here on Convo:

‘It’s not always avoidable – my council decided (incorrectly) that we’d been overpaid council tax benefit, they debited the amount they wanted back immediately, sending us overdrawn. It took me weeks to get the money back from them and a refund for my bank charges and compensation. I cancelled my direct debit for them and they now get paid late every month to teach them a lesson!’

Without stronger measures to control unarranged overdraft charges, they could remain at crippling high rates affecting some of the most vulnerable consumers. We want to see the financial regulator to review overdraft charges and crackdown on these punitive fees.


Better banking

Today’s proposals are welcome news, particularly with the steps outlined that aim to give customers better information and an improved switching experience.

However, we maintain that more will need to be done not only to increase competition but also to ensure banks deliver a better service for all customers.

We expect the Financial Conduct Authority to press ahead and implement these changes to help deliver better banking for consumers.

So tell us, what do you think of today’s proposals to shake up the banking sector? Do you think these will be enough?

Comments
Melvyn Rees says:
12 August 2016

I do not wish to make a comment.

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The best thing to do is get them where it hurts. – Their pockets.
What with the ridiculous interest rates, it’s not worth keeping your money in the bank for them to use and increase teir own wealth.
Let’s have a mass withdrawal. Think that wouldn’t work? It would if enough peope do it.

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My son often shops for small items of food, on’as and when’ basis, at his local small supermarket. Unfortunately, the supermarkets does not process these purchases at each occasion but on mass at random times! As a result the purchases do not appear on his bank account, giving him a false reading about the amount he has to dispose. As a result he found himself overdrawn due to no fault on his part. Neither the supermarket or his bank are prepared to help and he was landed with huge overdraft charge! totally unacceptable!

That’s very strange Halina. I have not heard of that problem before. Usually when using a debit card the transaction is registered with the customer’s bank immediately but the actual funds transfer takes place two days later [to simulate a payment by cheque]. This shows up on-line as “balance” and “available balance”, the latter being the amount remaining in the account once the outstanding transaction has been processed. I cannot see what possible advantage there is for the supermarket to delay credits, nor can I see how they are doing it if using a normal card terminal. Or is your son paying by cheque? Some traders present their cheques for clearance once a week. Most banks’ cheque books have a couple of pages ruled up for entering payments in and out of the account and with a column to enter the remaining balance; it would be a good idea for your son to record his transactions there [including any other charges to his current account as they arise] to avoid unexpected overdrawings.

I’m not quite clear here. If your son spent money at a supermarket using a card, there is little delay in my experience before they appear on your account. Are you saying the delay is much longer than this?

However, he does seem to look at his account and spend accordingly. It is much better to assume a debit card transaction takes place immediately and budget accordingly. The bank is not to blame for this of course, but if it happens regularly he could arrange an overdraft facility to deal with it?

I agree with Halina. Im my experience – depending on the shop – it can take a day or so for some debit card transactions to come through.

Savvy project managers may recognise this as being like the difference between “committed costs” and “actual current spend”.

I guess many banks want to set people up to fail here – so they will incur interest or other charges.

If you’re good at not regularly losing cash, then the best thing would be to do to just pay for absolutely everything with cash. Even then, when you go to the cashpoint, you must take care not to overdraw your account.

In practice, it is often hard to avoid having some direct debits – and these will often seem to turn up “unexpectedly”, giving further risks of incurring bank charges.

I am not clear how often Halina’s son checked his bank account. If it was continually online it suggests he is responsible in checking his finances, but if this is a regular problem he’d take the shortfall into account.

If these unusual occurrences happen, then why not arrange an overdraft to deal with them, just in case? Particularly if you are often running close zero.

My first port of call would be to establish who is at fault for the late processing, the supermarket or the bank. One would assume the bank, who stand to reap the benefit through overdraft charges.

Malcolm’s suggestion to arrange an overdraft with the bank seems a sensible way forward, but should this be necessary when another party is at fault? The only sure way to overcome this problem, when you consider the extortionate overdraft charges incurred by the banks, if the equivalent of those overdraft charges are paid to yourself when available and remain in your account instead of the banks, and if possible topped up whenever convenient, would lessen the chances of you accidentally going overdrawn.

Self protection is key in present day commercial and competitive spheres and reliance upon supermarkets and banks, who will take advantage of anyone who oversteps the mark is not recommended. Banks rely on cards as opposed to cash as a sure fine way to ensure their coffers are frequently topped up through ‘accidentally going overdrawn’.

Beryl, we do not know who is at fault, but it seems unlikely from what John says to be a general bank problem. My experience of debit card and online transactions is that they show on your account as “available balance” before the money has been withdrawn, so if you check your balance you should not unknowingly go overdrawn.

You ask about arranging an overdraft “should this be necessary when another party is at fault”. I understand your sentiment, but when doing so is free, and easy (if you are creditworthy) then it is a practical simple precaution to avoid unnecessary fees.

Malcolm, well since I never go overdrawn, I don’t envisage having to go cap in hand to my bank manager requesting an arranged overdraft facility but accept it is a very sensible option for some people who may need it.

I would however prefer to pay any overdraft money demanded by the banks into my own account rather than it went into theirs, preventing the likelihood of going overdrawn in the first place.

Beryl, most banks, if you are creditworthy, give you an arranged overdraft facility virtually automatically. You can do it online. No need to remove your cap. I don’t use mine normally, but if I have a particularly large bill to pay it can be handy whist you arrange for money to be transferred to fill the hole, like when we recently paid for some new furniture.

Traders are not at fault if they fail to present their received cheques daily for clearance. As I said previously, card payments cannot be delayed in transmission although there is a two-day delay before debit card transactions are charged to the customer’s account.

I really wish there was better education on how to look after one’s finances and how to run a bank account. It should be done at GCSE stage in my opinion. People need to adopt a form of ‘commitment accounting’ whereby every time they issue a cheque or use a debit or credit card they recognise that their available balance [or credit limit for CC payments] has been reduced. Contactless payments are a trap for the unwary and the same discipline is necessary. The banks make it quite easy for people to do this by including accounting pages in their cheque books and, most of all, by enabling internet banking which shows the balance available after allowing for uncleared commitments [although, obviously, it cannot allow for issued but unpresented cheques].

Perhaps, as a penance for the damage they have done to our way of life and the economy generally, the banks should collectively set up a nationwide education programme and an academic institution to deliver unbiased advice to all citizens; we have virtually no choice but to have a current account but there has been very little assistance provided to help people operate one until they have already got into difficulties by which time the relationship has become uncongenial.

I forgot to add that people can also check their balance at ATM’s and in some cases get a mini-statement.

Another suggestion for Halina’s son is to withdraw cash each week to cover his small-scale requirements at the local supermarket. There can then be no argument about any delays in processing his payments. and no risk of accidental overdrawing.

I agree with what you say John. I was fortunate inasmuchas my late bank manager son was able to advise me on the practicalities of money management and bank procedures and how easy it is for them to exploit the big spenders who must have the latest gadget at any price,.

Come on Pepes we live in a capitalist society.It’s a free for all.
That’s why we are having a strike on the railways,the bosses just wana
get rid of jobs to save more money for them selves or their shareholders.
They don’t give a damn about employees/passengers-and the banks have been
money grabbing since time immemorial.Where will it end?
It will end when I die!(Looking on the bright side)
The alternative is live in N.Coreea(mis-spelt in case he comes after me) and wave a flag!

Cheer up Rich 🙂 Kim Jon is not the solution. Chris Grayling is your man. Its time he started issuing hefty fines to any rail company who deliberately prevents people getting to their place of work on a daily basis…………….can’t blame the banks for us veering off topic though!

What we need is grown ups sitting down and working out a solution, instead of the “power posturing” that both sides adopt. There is clearly a practical solution to this if you put entrenched ideologies to one side.

Self-regulation has been proven not to work so many times before. Put yourself in the position of a Banker… stripe-up the customer and make more obscene profits and bounuses OR play fair and give the customer a fair deal? No-one’s going to force you either way. Hmmm….

Quite honestly, this is an insult to the general public’s intelligence.

As I see it, the way competition works in this market is that banks want to attract customers who are flush with cash but they don’t really want to have to provide services for customers who are broke.

So, those who stay in credit (or within agreed overdraft limits) get free (or relatively affordable) banking while those who don’t get penalised.

This leads to a sub-class of mostly broke people who are denied most banking services and thus end up as easy prey for other forms of money lending, not least so-called “pay day lenders” such as Cash Converters and h.p. companies such as the dreaded Littlewoods catalogue.

On the brighter side, there are savings clubs and credit unions emerging in response to these circumstances. And, of course, there are still some proper (still mutual) Building Societies.

I’m not sure if ending poverty and building a fairer society really falls within the remit of the CMA. Both Church and State might be needed to help tackle these goals.

I am happy with my Cooperative Bank.

Small branches used to be the best when the manager there nearly always knew you personally and used to call you by your name. No you are just a number in a far distant bank

I agree Bishbut. But that was in the days when banks were in the high street mainly to serve business customers and the professional classes. In those days the bank manager would decide to whom he [and it was always a ‘he’] would extend the privilege of having an account with his bank and trust them with a cheque book. That changed decades ago as companies stopped paying their workers in cash and banks competed for everyone’s salaries. The grand banking halls replete with miles of mahogany have been turned into spacious and gleaming foyers entered through automatic sliding doors and a lobby full of money machines. Of management grade staff there is nary a sign, just ‘representatives’ gliding you from one roller-castored armchair to another plying you with ski insurance and ISA’s whether you need them or not. I refuse to remain their humble and obedient servant, ****4561W.

I’m over 70 and a retired software engineer, so I guess I’m the exception. I have no fear of on line banking, I haven’t been in my local branch more than 3 or 4 times in the past 10 years, my account is still with my previous branch about 100 miles away. I do have my bank’s app on my smart phone, but never use it, can’t even remember the password. For me it’s of no value. I’m also paranoid about security, I haven’t been scammed … yet.
Having said all that, what is needed is regulator with real powers and teeth and who is not afraid to use them. Someone who can put a firm stop to obscene salaries and bonuses, end charges that push some even deeper into the mire, get rid of confusing and voluminous Ts & Cs and jail the people responsible for the banking disaster that cost the country billions (not give them even bigger bonuses!).
They should also force the banks to take more responsibility for identity fraud, if they have all that money to award bonuses, they can compensate the defrauded and not try to blame the victim for flaws in their own systems.
Another useless app is going to solve nothing, many of my contemporaries struggle with simple on line tasks and don’t own a smart phone. How long will it be before this app falls foul of a hacker or scammer – not if but when. “Hello I’m phoning on behalf of your bank / the government to help you set up the wonderful new app. Now if you will just give me all your banking details then I’ll begin….”

G Sillars says:
13 August 2016

My local branch of Barclays continuously changes counter staff, and there are never enough of them. This means when I go in to cash a cheque, (very old fashioned I know), I have to produce identification as I do not have a debit card, (no, I do not want one as I have too many pin numbers/passwords to remember already, and we must not write them down). They have obviously been told to make life as difficult as possible for us ‘oldies’ so that we conform to the way they want us to bank, sometimes bordering on rudeness. The queue for the counter service is always long, the person waiting to help you with a machine is mostly unoccupied. I was told yesterday that they were going to only be having one counter open soon and that they would not cash cheques for under £300. I would like to change banks but we hold a small business account with them as well and I do not wish to upset that applecart. I understand that the young want to spend as little time as possible banking but I do not wish to bank online, by phone, or with an app. I do wish to go into my branch once a week and cash a cheque but certainly not for £300. I also wish that the banks would let us ‘dinosaurs’ die out before inflicting their business standards on everyone, whether we like it or not.

G Sillars

I guess if Barclay do bring in that cheque cashing limit, and you don’t want to change banks, then you will be forced to adopt some form of card based system.

From my Barclays accounts, I have two such cards. One operates as a fully Visa debit card while the other can only be used for the purpose of making cash withdrawals in Barclays branches or using Barclays cash machines. Both require me to remember a 4 digit pin, e.g. so that, for counter transactions, I can verify my identity using a PIN Sentry device.

G Sillars says:
14 August 2016

That is my point, ‘forced’. What the customer ‘needs’ seems to have disappeared from their ethic.

I’d change banks as your account doesn’t suit you. However, I never used a cash machine until a couple of years ago; didn’t see why it was really necessary as I could go into my branch. Then I was prompted to use them – no longer worries about getting to the branch before it closed, easy on holiday when their was no local branch. I’d bite the bullet and get a debit or cash card.

I wouldn’t worry about upsetting the applecart. There are no apples in it.

Barclays say:
“How much money can I withdraw over the counter in branch?

There’s no limit to how much money you can withdraw over the counter in our branches – as long as you’ve got the money in your account.
If you want to withdraw over £2,000, please give us 24 hours’ notice so we can make sure the money’s ready for you to collect.
For smaller amounts, it might be easier to withdraw money from our cash machines using your debit or cash card”

No mention of a lower limit.

I think lower cheque encashment limits at counters are on the way in order to drive customers into processes that do not require staff. Unfortunately, customers cannot force banks to maintain uneconomical systems. If I reviewed all the cards that require a PIN the last one I would say good-bye to is the debit card.

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Between 2007 and 2010 the British Taxpayer bailed out the banks with cash and guarantees totalling £ 1,162 BILLION, equivalent to almost 3 times the total NHS budget for the same 4-year period!
Source: National Audit Office; https://www.nao.org.uk/highlights/taxpayer-support-for-uk-banks-faqs/

The Government’s justification at the time was that the banks were too big to fail so support was necessary to prevent their collapse and protect depositors’ savings. Most of us supported this action without being aware of the cost. Banks perform an essential role in our capitalist system but should not rely on the crutch of state support (i.e. Taxpayers’ money). As the banks’ mismanagement got them into this mess, and the Financial Services Authority (now the FCA, the Government’s watchdog) failed to prevent it or even warn about it, we can’t rely on either to ensure that Taxpayers’ money will not have to bail out the banks and bankers again, despite stress testing and other new measures.
The aim of the petition is not to impoverish bank shareholders but to instigate a debate in Parliament to protect depositors and taxpayers (to whom the interests of shareholders must always be subordinate) from the consequences of reckless banking practices. There can be no moral objection to this and if stress testing etc. are effective then shareholders should have nothing to fear from this proposal. The process by which this can be implemented will be determined by Parliament.
One remedy is to ensure that shareholders (who are the beneficiaries of bank ownership) are primarily responsible for the banks’ liabilities without a taxpayer safety net. They will then be keener to hold bank directors and management to account and monitor risk to prevent recurrences of such disasters. To achieve this, an Act of Parliament should require the removal of shareholders’ limited liability in banks (and any other business deemed too big to fail).

An example of how this could be done follows:

• Implementation could be phased to give banks time to get their houses in order; e.g. in year one, shareholders will be liable for 25% of banks’ liabilities, 50% in year two, 75% in year three and 100% in year 4. Any collapse in a bank’s share price will indicate that shareholders do not have confidence in its directors’ ability to manage risk, or there are skeletons in the cupboard. Either way, it’s better we know before the begging bowl is held out.

• Banks will be required to regularly publish (e.g. weekly) the £ liability per share (risk ratio) so that shareholders are aware of their level of risk. As guarantors of the banks’ liabilities, shareholders will judge whether the prospect of dividends justifies their risk exposure so will decide to retain or sell shares. Banks will not be permitted to acquire risk of greater value than the aggregate amount guaranteed by their shareholders.

• E.g. if at the onset the published risk per share is (say) £1.00 and a shareholder has 1,000 shares then the risk he or she must guarantee is £1,000. However, if the risk ratio increases to £1.25 per share then to maintain his 1,000 shares the shareholders must either increase the amount he or she is prepared to guarantee to £1,250 or sell or forfeit 200 shares to reduce the holding to 800 shares to be within the value of his or her guarantee. (800 x £1.25 = £1,000). Forfeited shares would become the property of the Government (who could hold or sell them back).

• To prevent shareholders dumping shares if there is a whiff of trouble, the Government would be empowered to suspend share dealing in any bank suspected of having problems. In the event of a major crisis resulting in bank insolvency due to liabilities exceeding the banks resources + aggregate value of shareholders’ guarantees, then the Government will have to step in as before to protect depositors but at least the shareholders will bear most of the cost. This may in turn lead to the slow de facto nationalisation of some banks.

These measures may seem draconian but are feasible and practicable. In the short term they may result in lower share prices, but these will recover as the market finds banks’ true values and confidence in their stability grows as a consequence of the increased scrutiny that will ensue. They will restore confidence in UK banks and enhance their reputation. All that is required to ensure that banks behave responsibly and protect depositors and the UK taxpayer is the political will to enact them. The problem will be to overcome the vested close to government who will object.

Whilst I am in agreement with you that the shareholders should take responsibility for the mistakes of the corporation that they own, I don’t believe it is necessary for limited liability to be removed nor to set up a complicated regulatory structure. It would be possible in either of two ways.

It would be possible to nationalise a failed bank without paying the shareholders any compensation at all or only a much reduced price per share. Alternatively, the authorities could allow a bank to fail and just rescue all the depositors money (and take over the repayments from the bank’s creditors to offset some of the cost involved).

Surely either of these would eliminate the moral hazard of rescuing banks that have mismanaged their (and their customers’) assets.

For historical reasons of various take-overs, we ended up with 2 accounts in Santander (National Provincial>Abbey>Santander) and (National Girobank>Alliance & Leicester>Santander). We merged the accounts, but have stayed with Santander, only switching between different accounts offered by them, currently using the 123 account, which often features in your Best Buy accounts. I see no reason to switch to an account that might offer a good interest rate for 12 months but then drop to near zero, whereas Santander’s higher interest on higher balances has, so far, been open-ended. I have so far declined to install/use their mobile app, and will probably not be persuaded to do so.
I do regret the passing of Girobank, which meant a 100 yd walk to our nearest post office, open 5 and a half days a week, whereas it was a 3-mile drive to the nearest banks, only open for a total of 4 hours per week! I would suspect that both that post office and those banks are long since closed.
My experience of other banks, based on looking after my Dad’s account (Clydesdale) in his final years, and trying to get a mortgage (RBS) for my son’s first property purchase, were fraught with difficulties, mistakes, sheer negligence, lack of communication, cancelled and non-available appointments, etc, so I shall not be rushing to switch. The latter catalogue of mis-management almost lost the deal for my son’s property purchase, the final straw being when the bank sent the loan advance to the wrong solicitor!

As regards moving bank accounts, I guess a lot of us want our choice of bank to be like our choice of medical and dental practices. In other words, we want to choose good ones and then build up long term relationships with them.

If the CMA think that “healthy competition” must be fostered by encouraging us to frequently change banks, they then must be living in “cloud cuckoo land”

Good point, Derek. Unfortunately, that aspect of customer preferences, and, in effect, loyalty, gets little credit in the various market reviews that take place and is lacking in Which?’s assessments of consumer priorities.

If increased switching affects the banks’ profits then there is no doubt they will carry on cutting branches off their tail of under-performing locations.

House-building is booming in our part of the world but not a single new bank branch has opened in decades and many have closed, often in towns and villages that are now expanding at a terrific rate. The argument is that the new populations merely sustain the remaining facilities and that most people can do most of their banking business without using a branch. Sadly I fear that is true.

As I suspected the insecurity of it all:
theregister.co.uk/2016/08/10/open_banking_security/

http://www.theregister.co.uk/2016/08/10/apple_says_banks_cant_touch_iphone_nfc_without_harming_security/
Is an interesting insight on how the richest company in the world intends to make more loot, and raises the question about competition law.

But the biggest source of hack-passwords and codes is from employees of companies. I suspect Apple is spot on: allowing any company to have access to their highest security level systems is a recipe for disaster and Apple knows it. And Apple’s contention that the banks simply want a bigger slice of the pie in Credit card terms, given their already massive profiteering, would seem to repudiate the thrust of your comment.

I am concerned that the Competition and Marketing Authority’s solution to perceived lack of adequate competition among both the energy companies and banks is to drive a coach and horses through the data protection legislation and make them share my data with other companies. The wider the data are shared the greater the risk of leakage and while I presume there will be some way of opting out it is obvious they don’t want to consider an ‘opt in’ system or those who already ignore the possibility of moving will not bother with that either. Unfortunately Which? also seems to believe that more switching is the answer when clearly it is a logical impossibility for his to be true for everybody or even the great majority. I have not switched either lately, not because I have not considered it but because a small saving is not worth the risk of poorer customer service, which seems to be an ever more widespread risk. I certainly do not want all my financial dealings accessible by using a single PIN on a mobile phone – what would be so easy and convenient for me would also be easy and convenient for a fraudster or hacker.

You can trust Banks – Part Two

Incidentally on the matter of white collar crime you can see it here creating an Australian housing bubble. Exactly what happened to our housing sector. Does NOBODY learn from history!!!!

Whilst everyone concerned , the banks , the brokers , is making money in the dirty world of fraudulent mortgages nobody squeaks. And then everyone seems surprised. I am quite shocked that Australia seems to have been so unaware of what was happening. Are the politicians complicit in feeding the bubble for political advantage in the years leading up to a crash.

news.com.au/finance/business/banking/mortgage-fraud-is-the-dirty-secret-that-could-spark-a-financial-meltdown-economist-warns/news-story/53bf8bf125b31e39e0d05c61b3f34d06

aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/White_collar_crime/Submissions

In case you wondered the UK banks have a string of Court Cases for various naughtiness including placing viable companies into “special measures” before selling them off cheaply. Personally I think Which? as a consumer champion should be highlighting the most vicious and venal of the High St. banks so we can avoid them.

Handelsbanken, Co-op, Clydesdale, Nationwide … there are clean banks but unfortunately for some reason this side of the consumer coin is not being counted.

“Handelsbanken, Co-op, Clydesdale, Nationwide … there are clean banks but unfortunately for some reason this side of the consumer coin is not being counted”.

It doesn’t make for good headlines dt. No more than decent energy companies or decent car manufacturers. Much better to complain about the high cost of unarranged overdrafts (why not recommend an arranged one?), Big 6 ripping us off with high SVTs (point out that customers could change to their competitive fixed price tariffs), car manufacturers advertising optimistic mpg (why not explain that the EU NEDC test gives these mpgs, and are the only ones the EU allow to be publicised)?

I hope we will see more balance from a responsible organisation, so that issues can be debated properly with the relevant facts impartially presented. At the moment some simply lead to retaliatory comments out of frustration. Or digging around to find information that should have been given to avoid others perhaps being misled.

We’re doing well for medals though. I’m enjoying a lot of the Olympics – particularly did the Rugby 7s. 🙂

It’s entirely possible that the problems created are not entirely down to fraud but to an inherently flawed capitalist system. As long as we continue to propound the myth that ‘It’s all down to confidence’, and as long as enough believe that then the system will continue on its merry way, using Monopoly money for transactions that has no basis whatsoever in reality.

Perhaps that’s what needs addressing. Money isn’t real – it’s simply a column of figures and the system is entirely based on those insubstantial figures that have no correlation in reality. I mean, when was the last time the bank ever gave you when the five pound note promises? The answer is never, because it can’t. The system is almost entirely dependent on both accurate record keeping (and no one ever makes mistakes with rows of figures…) and on individual honesty (not a lot I can say about that one) and, perhaps most frighteningly, no one in the world truly understands International macro economics. The reason ‘no one ever learns’ is because no one actually understands the system. The system our very lives depend on. Warming thought…

I would be gloomy too but I do think that there are cures for some of the ills. However to make this short they can be broken down to:

– Adequate punishment for white collar crime and with added increments for Banking.
– The velocity of money/stock being traded should be taxed as has been touted before.
– Directors to be criminally liable for fraudulent actions, the concept of the “company” being a person has become twisted as a means for people to escape responsibility

None of these is impossible to arrange. The question is perhaps who are interested in no change and what can be done to enthuse them. Our electoral candidates?

On a personal level we can avoid the Banks and building societies and other companies with long track records of unsocial or anti-social practices. However the public needs to have this information gathered and in a trustworthy way put out there and encouraged to be boycotted.

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Gold is pretty useless as a standard so I don’t see any use in it’s return; it was simply a scarce resource and is not essential to life. Money is no more than a token to allow complete exchange of wealth, rather than exchanging direct effort – you dig my garden, I’ll fix your roof.

There is nothing new about the basic way the banking system operates as far as I can see, with greed fraud, mismanagement, corruption wherever money is involved. Perhaps one way is to abolish “private” banks and only allow “national” banks where the excesses can be controlled (wishful thinking). My reassurance is that behind the business that handles money lie the real wealth creators – those who provide food, manufacture products, provide essential services from human effort; failed banks might impede that but won’t stop it. So we will survive.

Comparisons keep being made between the USA and Russia that I don’t see a reason for. Both are as corrupt as anyone. and probably have as many decent people as anyone.

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In case anyone missed this it details how auditors apparently missed the warning signs. Bear in mind that the idea that auditors could also be advising companies for vast sums did seriously muddy the relationships.

Auditors are appointed by the shareholders to check-up on the Directors essentially but this aspect is much missed as the actual beauty parade for which auditors are appointed is conducted by the Directors. I am having my own doubts about PwC and their understanding on whom they are reporting to in respect of a charity.

independent.co.uk/news/business/news/pwc-sued-for-record-55bn-over-collapse-of-taylor-bean-whitaker-tbw-us-mortgages-a7191356.html

Private Eye regularly points out the failings of the major accountant/auditors and their apparent lack of independence and objectivity. They often earn large fees for “consultancy” to the companies they are supposed to audit. Is it too simple to make an audit the responsibility of a accountancy firm that has no other links with the company?

A motor auction company was, it is claimed, destroyed by an accountancy firm sent in to “help” but who appear to have colluded with a bank to their mutual advantage – but not that of the company! Allegations of course but “squeaky clean” should surely be on an accountant’s mission statement.

PEYE reports that BHS was passed as a “going concern” before being sold on.

The financial system needs more than mobile phone apps. Attention needs to be paid to the “fundamentals” – competence and propriety. It would also help if the regulators, supposedly protecting us, were not populated by ex members of dodgy accountants.