/ 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
Guest
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!

Guest
FINSBURYPARKER says:
1 July 2012

“Are you calling me a horse”?
______________________________

????……….Only the guilty flee where none pursue Jenny!…But,..I guess my analogy was wasted
____________________

‘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.

Guest

“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….

Guest
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”.
____________________

Agreed, I feel guilty these days cashing a cheque, ‘a Service’?…….That disappeared along with our milkman’s service!

Regards.

Guest

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….. ‘

Guest
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! 🙂

Guest
FINSBURYPARKER says:
1 July 2012

‘My parents still get milk from a milkman’!
________________________________

?????….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.

Guest
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.

Guest
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.