/ Money

Why are banks still failing to prioritise their customers?

Overdrawn

Last Tuesday, I appeared before the House of Commons’ Treasury Select Committee to give evidence on the Competition and Markets Authority’s banking inquiry.

Alongside me were representatives from Atom Bank and Tesco Bank, and it soon became clear it isn’t just Which? who feels the Competition and Markets Authority’s [CMA] work fell short.

Why does it matter?

As previously mentioned, Which? is concerned that the CMA failed in its report to go far enough. It’s long been clear that the banking sector isn’t competitive enough, resulting in poor outcomes for consumers, so seeing the CMA going through a long and detailed investigation, only to provide seemingly rushed remedies, is a real problem.

This issue became clear multiple times in the session with the MPs digging in to issues around unauthorised overdrafts, free-if-in-credit accounts and switching, among others.

Unauthorised overdrafts are a key area of concern for Which?, with some banks charging four times as much for an unauthorised overdraft than a payday loan, raising the sector funds of over £1bn per annum.

In a clear shortcoming, the CMA has simply suggested that banks cap unauthorised overdrafts to a level they themselves can set. A clear example of marking your own homework if ever there was.

What can be done?

Of course, spotting the problem is only one part of it, and there was a real appetite in the committee to find solutions for the problems the CMA had failed to address.

For unauthorised overdrafts, the ball has been dropped, but a real opportunity lies in the Financial Conduct Authority’s [FCA] upcoming review of the pay day loan cap, which is due to take place in January.

Happily, the committee were keen to understand what role they could play, and there certainly is a need for a strong voice in Parliament to support the FCA taking on this work and finding effective remedies.


Stepping closer to better banks

Such issues do have to been seen against a back drop of overall change in banking. For too long banks have done what they have to do, rather than what they should do. Changing this will take time, but hopefully by tackling one issue at a time, and using sessions such as this one to shine a light on what still needs to change, we can get a better market with real options for consumers.

What more do you think can be done to improve banking?

Comments
Guest
Lynn says:
31 October 2016

Its time these charges where sorted out, £10 for going over £2, for a few hours is ridiculous, I’m a carer, Ido my best on llimited funds.

Guest
Terry says:
31 October 2016

I have serious concerns not just with banks but the FSA. The banking industry may just as well be regulating itself. Has anyone ever won a bonefide dispute with a bank and been supported by the FSA ? I personally have had no joy with them whatsoever on two occasions. Apart from getting us in our current financial mess the banks are still holding everybody to ransom with fees. How can it make sense to charge the people who I presume have the least and reward the few who have the most to invest or save ?

Guest

Due to the prevalence of miss selling and outright fraud it is essential that banks with credit cards deliver the correct paperwork with the relevant questions by first class mail if not by recorded delivery within three weeks at the outside. Documentation should include consideration of money back guarantee claims and section 75 claims. My recent experiences indicate that nobody should assume that either the cc company or the FSA is on the side of customers

Guest
Paul Hancock says:
31 October 2016

Is it not possible to give 48 hours grace if the overdraft is no more than , say, £100. This would allow people to obtain the monies to restore there account to credit and also not penalise them due to debits hitting them when funds are low. The principle is simple: don’t penalise someone on a low income/low funds. Instead help keep their finances fluid.

Guest
Anne says:
31 October 2016

People tend to trust banks it’s about time these banks earned this trust and stopped there deviouse dealings it’s time to put the customer first the banks will still earn there profits just not as much .The things I find most annoying are the constant misseling by the banks using products which are designed to confuse and mislead customers it’s time to come clean

Guest
alan says:
1 November 2016

Banks, by their very nature are deceptive and corrupt. They have no reason to be benevolent or helpful to their customers, they view us as unwitting sheep to be led and exploited

Guest
Neville says:
1 November 2016

As well as the environmental impact of products, I’d like to see Which? introduce some awareness of ethicality (beyond the obvious head-liners) in their/our reviews, even if merely garnered from internet sources (with citations), given the extra effort required.

Guest
Brian Ord says:
1 November 2016

Well done by your Chief Executive, Mr Smith. Whilst I manage to get by without an overdraft myself, I can emphasise with those who can not. Prices continue rise and wages do not. Charging unfair overdraft fees simply exasperates the customers position pushing them deeper in debt. Banks are currently paying as little as 0.01% and this should be reflected in overdraft fees.