/ Money

Will the Chancellor restore your confidence in the banks?

Mansion House

Every year the Chancellor delivers his Mansion House speech – the topic, the state of the British economy. It might sound heavy but bear with me as this year’s could offer some light relief from our financial worries.

Today’s Banking Reform White Paper outlined plans to ring-fence retail banking and improve protection for your savings. What does it mean for us?

We might think that these technical proposals have a limited benefit for our day-to-day banking but, irresponsible risk-taking meant that the government bailed-out the banks to the tune of £2,000 for each man, woman and child in the UK.

Just think, the interest bill alone on this bail-out is £5 billion a year – if we weren’t paying this then we could afford to cut over 11p off a litre of petrol and diesel.

The ring-fencing of retail banking services will help protect the banks from instability. Rather than banks keeping all their cash in one pile, the money we share with the banks – in our current accounts, depositing cheques etc – should be separated from their risky investment banking arms.

Increased banking costs?

No doubt, we will hear scaremongering that the reforms will increase costs for us as bank customers. But this is simply not true.

The UK retail banks were profitable throughout the financial crisis and the services which we use on a day-to-day basis will be provided within the ring-fence.

The full proposals will not be implemented until 2019 so it will be some time before we see the benefits. In the meantime it’s important we do not allow the vested interests in the banking sector to delay the proposed reforms.

New banks to shake up the big banks

It is important that steps are taken to break the dominant position of the largest high-street banks and ensure they compete for our custom by offering better service and value. We’re already seeing M&S hitting the high street (although they will still be part of a larger banking group – HSBC) but we need more new entrants.

Protection for savers’ deposits will also be increased – meaning that you will be at the front rather than at the back of queue to get your money back if a bank goes bust. We want the Chancellor to deliver a simple and clear deposit protection scheme with a limit of £85,000 for each banking brand. You shouldn’t need to investigate the corporate structure of your bank to find out if your money is protected.

Do the Chancellor’s plans offer you some hope or are you doubtful they’ll make a difference? Will you feel happier that your money is safe in the knowledge that it has been separated from the money they choose to risk in investment banking?

Comments
Jenny says:
1 July 2012

Are you calling me a horse? 😉 I think Ive used my 29 years quite well, but I know 70 year olds who have as much common sense as they did at 12!

FINSBURYPARKER says:
1 July 2012

“Are you calling me a horse”?
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????……….Only the guilty flee where none pursue Jenny!…But,..I guess my analogy was wasted
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‘But I know 70 year olds who have as much common sense as they did at 12!

I know 29 year olds who have never had a job in their entire existence, but I know plenty of 70 year olds who have never been unemployed!

It seems the old adage, ‘Youth is wasted on the young’ just might be right!

Mind you,…29 isn’t exactly youthful now,…is it?

Regards.

“Religion is morally neutral in itself, but can be used to control others” ….not can be, Jenny, it IS used to control others just like politics is used, & this makes it a corrupting influence. Banking used to be a ‘Service’ when I first had a current account but over the last 40 yrs the whole system has become totally corrupt.

I read theology for 4 yrs in the late 60s & early 70s & saw from behind the scenes how hollow it all was….

FINSBURYPARKER says:
1 July 2012

“Banking used to be a ‘Service’ when I first had a current account but over the last 40 yrs the whole system has become totally corrupt”.
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Agreed, I feel guilty these days cashing a cheque, ‘a Service’?…….That disappeared along with our milkman’s service!

Regards.

You mustn’t plaster all 70 yr olds as being senseless at 12. The dodgy people I avoided then are the ones I avoid now….. ‘

Jenny says:
1 July 2012

I didn’t say you were 70 year olds who lacked common sense. Now who is the wicked man fleeing though none pursue! I am a little surprised that someone who regards religion as a control mechanism uses a biblical quote, though. Also, Churchill didn’t completely oppose technology (Churchill College, Cambridge), surveillance or bankers.
If I had misunderstood the analogy, who is the horse and while we are at it, what’s the water? 😉

I think in general, one can’t assume function by age. 29 is young by some measures and not others – young for a Prime Minister, old for a Wimbledon champion. 😉
My parents still get milk from a milkman! 🙂

FINSBURYPARKER says:
1 July 2012

‘My parents still get milk from a milkman’!
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?????….Milk from a milkman’???….Mine comes from a cow,….Unless you mean ‘The Milk Of Human Kindness?….very short supply these days!……..Tried the Soya stuff, too sweet.

Regards.

Jenny says:
1 July 2012

Do you keep cows then? I can see how you got confused 😉 You are right though – we actually milk people.

FINSBURYPARKER says:
1 July 2012

He whom sits on high has fired a warning shot across my bows re: my posts on this subject.
Regards.

As amusing as your exchanges are, they are veering significantly off the topic of banking. To put things back on track, you might be interested to read what our Chief Exec has said about Barclay’s fine and then what consumers think in our survey:

http://www.which.co.uk/news/2012/06/barclays-fine-highlights-corruption-at-heart-of-banking-system-289892/
http://www.which.co.uk/news/2012/07/prosecute-individuals-involved-if-banks-break-the-law-say-consumers-289977/

We hope to have a new Conversation on this tomorrow. Hope to see you there.

FINSBURYPARKER says:
1 July 2012

O.K Patrick, it was just a bit of ‘Froth’!….Man does not live by ‘Banks’ alone,…Serious though the matter is!

Regards.

Some of the money that Barclays have been fined and the money the other will be fined should go towards funding a proper Serious Fraud Office, as I gather they’ve not persuaded misdeeds in the past due to lack of resources and funding.

Do we really think that £290M is any more than a pin-prick c/f to a billions they raked in? It was an insult to all bank customers who will end up paying it. The only thing that might curb bank corruption is putting the guilty parties in prison with long sentences. As politicians & bankers are in each others pockets this will never happen…….I suggest you don’t hold your breath. Bank regulators & regulations are a joke too. The whole system is broken.

FINSBURYPARKER says:
1 July 2012

‘Do we really think that £290M is any more than a pin-prick c/f to a billions they raked in’?
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Exactly Terry!

£290 BILLION would have concentrated their minds!

Regards.

FINSBURYPARKER says:
1 July 2012

As far as ‘Bonuses’ are concerned, that’s the concern of the ‘Shareholders’, provided its a ‘Privately owned Bank!

As long as these ‘Private’ Banks pay out nice large juicy Dividends, the shareholders are hardly likely to bite the hand that feeds them, are they?

A similar situation occurs within the realms of the Union Barons, as long as their member get a nice slice of the action, their members really don’t care if their Top brass get huge Salaries, and live in mansions!

A different kettle of fish exists regarding those Banks where the public has a large investment via their Taxes!

That in turn has its own problems, turn the screws to hard on them, and the people that are capable of turning it around to get in the black again will move to pastures green.

The term ‘Northern Rock & Hard Place’ applies here?

So, I guess a corruption of that old adage, ‘Oh what a tangled web we weave when Banks first practice to deceive’ is apt for the situation we find ourselves in.

How to put things to rights?…..Ahhh,…..There lies ye rub!

‘Give me control of a nations money supply, and I care not who makes it’s laws’!

Amschel Rothchilds

Yup!….That sounds about right!

Jenny says:
1 July 2012

Bonuses should be dependant upon success. If they aren’t, then it should be called pay.

I agree with the survey, in that I feel the government would not act in consumer’s best interests. Already it appears that they have reduced taxes for billionaires but increased it for others. Being equal in percentage terms across the board, even if it meant cuts for all, would have been better.
I think that these would cast doubt on the government acting in the ‘average’ citizen’s best interests.

I agree also with previous posters’ views that the fine is too low and that it should be for individuals, not the bank. Fining the bank just results in taxpayers footing the bill, so individuals need to lose out.

Any fine that is levied against a bank should also see the entire board of directors banned from sitting as a director in any company. Only once the punishment is seen as being harsh enough will the individuals who let this sort of thing happen either through their actions or lack there of will they start to improve. And maybe fine each director too. After all, they paid all that money seemingly in good times and bad

I wish any chancellor best of luck or any politician trying to reform the banking system. The problem is in any other walk of life politicians and bankers would be calassed as serial criminals no hopers to reform. They have a nice cosy club going between them.

Hello everyone, we have published a new Conversation you might be interested in: ‘Prosecute bankers when banks break the law’ https://conversation.which.co.uk/money/barclays-libor-scandal-prosecute-bankers/ We’re keen to hear what you think.

Why should bank employees get bonuses? I managed a £ half a million NHS ward budget & was never overspent but I didn’t get thanked for keeping an eye on it…….

Daveg says:
2 July 2012

Can anybody tell me what happens to the money the Bank of England gives the Banks,the total money when the next £55 billion is given will be £385 billion.Where does this money come from,does the B of E just print it.If so print some more for the NHS,the Forces.OAP’s,removing soup kitchens,you could go on forever,so do these messages achieve anything.

@daveg, Its not real money (i.e the stuff you have in your wallet/bank account).

For a detailed explanation of QE see .. http://en.wikipedia.org/wiki/Quantitative_easing

I’ve always thought this QE rubbish is a huge mistake, I would have rather seen the chancellor force HMRC to refund one months tax to all taxpayers. Now that is real money.

Jenny says:
2 July 2012

Very useful information – thank you