/ Money

Could this be the turning point for real change in banking?

Bank signs

The government will today respond to the Independent Commission on Banking’s (ICB) recommendations to reform the banks. It’s a once in a lifetime opportunity, but banks shouldn’t wait to treat their customers well.

We talk a lot about banking reform at Which? – and I mean a lot. But it’s with good reason. Banking services are vital to our everyday lives. So, when things go wrong, it can be disastrous on an individual level and for the wider economy.

In George Osborne’s response to the ICB’s recommendations, one of the key things he’ll announce are plans to separate retail banking from more risky investment activities. Otherwise known as ‘ring-fencing’, this is something both we support and, from the comments made here on Which? Conversation and at our ‘Your Voice’ events, consumers support it too.

Ring-fencing would mean that, if the investment bank was at risk of failing, the retail banking services upon which most of us rely wouldn’t be harmed. Theoretically, this would reduce the likelihood of a massive taxpayer bailout, as seen in 2008.

Customers need to have their say

One of the things we’ve been particularly vocal about is the missing voice of those most affected by the banking crisis – the consumer. So, in advance of the government’s announcement today, we carried out research to find out what people think about reform and how soon it should happen.

We found that when it comes to banking reform, almost half feel the government prioritises the opinions of banks over everything else, whether that’s consumers, businesses or regulators. That’s quite a depressing statistic, but somewhat understandable when you consider the power of the banking lobby and the distrust people feel in the banking sector overall.

We also found that only one in five people are confident that the government will actually reform the banking sector. Perhaps this is a wake-up call for the Chancellor to keep his promises and stick to a robust reform agenda.

Impatient for change

We’re no doubt ready for change. In fact, most people are impatient, with the vast majority (94%) wanting banks to make significant changes within five years, and two thirds wanting to see reform in the next 12 months.

That may sound like a big ask, but if banks think the old chestnut of ‘it’s too complicated to undertake that soon’ will wash with the public, they should know that almost 57% of people don’t think that’s a valid reason for holding back.

Moreover, half of the population doesn’t think the potential cost of change, or arguments that other countries aren’t doing the same, should prevent reforms going ahead either.

Banks can make changes now

As for Which?, we think the government has a once in a lifetime opportunity to reform the banking industry, restore consumer trust and prove it hasn’t let banks off the hook.

And aside from that, banks don’t need to wait for the government to change the way they carry out their business. We’re all bearing the cost of the bank bail-out – £2,000 for every man, woman and child has been injected into the banking system, with £5 billion a year in interest payments. Don’t we deserve a bit of payback now?

Banks have the power to develop value for money products now. They can sort out their complaints handling practices and deliver a service that will go some way to restoring trust in an industry that’s let us all down. How about delivering some of that as a New Year gift to their customers?


British Bankers’ Association here. We know we have a lot of work to do to restore confidence and trust in the banking sector. And we would be keen to understand more about the questions you asked in this research. Did you really find that “almost half [of respondents] feel the government prioritises the opinions of banks over everything else, whether that’s consumers, businesses or regulators”? Because we don’t know of any bankers who would agree with that, let alone MPs. Why would the opinions of banks not include the interest of consumers, businesses and regulators? Consumers and businesses are their customers, and regulators make their commercial activities possible.


Basically because past experience shows the only thing Banks are interested in is their own profits and bonuses – not the interest of the country.. That is why they have lobbied for reductions in regulations – ignored protests about bonuses – and been irresponsible in dealing with mortgages for years.

I certainly agree with Which? that “we feel the government prioritises the opinions of banks over everything else”

Why is it that the lifeblood of banks namely savers – are treated so shabbily ? My tiny “savings” interest have dropped by 90% since the credit crunch – There is no incentive to save in this country now.by banks – Nor is there any incentive by the “government” – rather curious???


We asked members of the public about whose opinions they think the Government prioritises, and think it is fair and reasonable to ask people directly what they think. We wouldn’t assume to be able to represent what people think without asking them directly and then reporting it. If public opinion is valued and listened too, then perhaps the challenge to the industry is to prove that.


First off, it’s good that you are talking to us minions, the people, but are you listening?

I am in a minority in the UK whereby I do not blame the banks for the bail out at the taxpayer expense. You are a business and as such your members operated to the letter of the law and rules set by the previous government. Had those laws/regulation been in the hands of the B of E, I suspect we wouldn’t be in half as much of a hole as we are in now.
That said, there are some things that your association and members should answer the public on.

* “We know we have a lot of work to do to restore confidence and trust in the banking sector.”
Sounds suspiciously like the same approach of the major players in another industry that the public are being kicked by, the energy industry.
The similarities in a total lack of regulation are also what is puzzling the public, why we are paying millions of pounds each year to regulators which are contradicting themselves and not acting in cunsumer’s interests?
Is it not time for the “jobs for the boys” to stop?
I want to see people not connected high up with banks sitting on the FSA and the FOS. Those at the FSA have already stated that they failed to regulate, would the BBA not agree?
Does the BBA not think that it is time the regulators got their act together, instead of “working with” banks, started standing up for us?

* “Why would the opinions of banks not include the interest of consumers”
Where is the “interest of consumers” when a former head of the BBA sits before a parliamentary select committee and lets slip that the level of bank charges placed on any given bank’s consumers, are not charged at a level that individual account holder has actually cost the bank?
Where is the “interest of consumers” when the banking industry, along with the BBA, do their level best to delay, stall, fight, the very same consumers whom are within their right to be provided with a breakdown of any given bank charge or failing this, a refund of the said bank charge?
Banks are recovering the losses they incurred during the previous financial year, using bank charges on consumer’s accounts, does the BBA believe this is a fair practice?
Do you disagree with my view, that a bank’s losses incurred in any given financial year, are [mostly] the bank’s own fault as a result of bad lending and as such, that bank’s consumer’s bank charges, should not be used to attempt to recover such losses?

Despite common law in England and Wales and legal precedent, on charges being deemed to be a penalty, your members today, continue to charge consumers accounts at levels that do not reflect “actual loss”
Only two weeks ago, I assisted a high street bank’s customer in the recovery of £140 worth of bank charges issued, for an unauthorised overdraft of just £7, which covered just 5 days.
This was only present because the bank “reused” funds set aside for an authorised card payment to pay a direct debit, so instead of just charging for a non payment of a direct debit, the bank issued charges for unauthorised card payment (which was authorised by the bank) plus an unauthorised overdraft fee, which together, raised more money in charges for the bank – [which is a direct breach of the fraud act, but that’s for another post]

There are a list of examples longer than my arm, from all types of bank consumers, that have been let down by their bank, which is supposed to be working in their interest.
The banking industry have been given a prime position by government, with each and everyone of us having to change the way we shop/pay bills/receive benefits, receive wages, to the point that it is almost impossible to avoid having a bank account of some kind. All the banking industry has done is use this to gain at consumer’s expense.
Your members charge us for anything and everything.

I suspect your posting may well be nothing more than hot air, but I shall reserve judgement until I read your replies for amount of questions and statements you are sure to receive on here.


Thanks for the article and a chance to rant. Where do I start? The city of London is living in a bubble.

Whilst the financial sector paid itself £17billion(2010/11) in bonuses those at the bottom end of society were being asked to bear the brunt of the recession. This disparity will ensure nothing but disdain for ‘greedy bankers’ at the top, and disillusion with politicians who fail to curtail the city excesses.

We learn today big business(read Banks) employ tax experts to ensure they pay proportionately less to the exchequer than other sectors and have the nerve to tell us that if they don’t pay their top people (who got us into this mess) astronomical rewards we shall lose them. Ha! Let them go. What happened to market forces when companies fail? How do we manage to keep top brain surgeons without throwing million pound bonuses at them every year?

We are witnessing Captilism under trial and things have to change in the City. A pity the City hasn’t quite noticed yet.

David H says:
21 December 2011

The BBA’s tone tells you all you need to know about the banks, their attitude and how many million miles away they are from restoring trust.

johnco says:
20 January 2012

If BBA want an example of the disgraceful conduct of a bank, I would be happy to oblige. The story starts with falsehood, telling a customer that she could not open a specified account at HSBC without going through a financial adviser, and then selling her a totally inappropriate in house product instead. As she was 70 years old, in poor health, and with no financial expertise, and English is not her native language, she was an easy target. It took nearly two years (going through FSA who did not distinguish themselves!) to get back the money invested. Complaints were ignored and correspondence went unanswered until we had to contact FSA, and even then the process was dragged out until my wife was so dispirited that she no longer had the strength to fight on. It was deceitful and irresponsible for them to baulk a customer’s attempt to open a chosen account, and steer them to an in-house product which favoured the bank at the customer’s expense, with no other options offered. It should be illegal for banks to describe their “in house product” salesmen as “financial advisers”. I have all the documentation to prove the above, and would be happy to enlighten BBA as to the ugly side of high street banking, for which much tighter and effective regulation is long overdue.
Even interest rate manipulation is aided by the fact that banks are not legally obliged to show the interest rate being paid on all statements and relevant correspondence. To find that an interest rate of 2% on an account has been surreptitiously ratcheted down to 0.05% borders on criminal deception!