Wednesday, 29 September 2010

Banks - don't bank on them

When I worked in a bank, a bank employee lived or died by how many inappropriate 'products' they sold to unsuitable people, ie their monthly targets. It was indeed this cavalier attitude to customers and customer service which drove me out. I just couldn't pretend that we offered the best mortgage rates on the High Street when we didn't.

Now we read daily that the majority of banks are no longer lending to customers or granting mortgages even to those who would not so long ago have been judged 'a good risk', but in all probability would have got that 100% mortgage even if they were a lousy risk, just to get some bank employee's targets up to their monthly quota. No big deal if a house was repossessed to be sold and mortgaged again after all.

Horror stories abound of successful small businesses with good track records who merely require a small bridging loan until their new stock arrives or their bills are paid and their cash flow restored, going to the wall because of the refusal of banks to help with what was once everyday business for them. The bank managers who once knew their customers personally and interviewed the business customers on a regular basis are nowhere to be seen.

The deliberately-low (to aid the economy) 0.5% base rate seems to have no influence on their unreasonableness and no interest rate advantage is being passed onto the customer, even supposing we are lucky enough to be granted the privilege of being a customer.

I have but ONE question. How are banks making their money now if they are no longer selling products/lending money?

Sure they can coast along on exorbitant customer charges and zilch customer account interest for a while, but new business and extra business is where it's at.

Just because we wanted them to stop gambling with our money and selling us down the river, only to end up having bail them out, doesn't mean we wanted them to stop providing financial services at all. In fact if anything, they OWE we taxpayers for bailing them out and we expected better treatment and more humility from them as a result.

All we wanted was some integrity and some transparency and less greed. Most businesses can manage this - why not banks?

Then again, even Tesco rejected me for a credit card the other week.

I'll leave you with my story of the week on banks v the people.


Wisewebwoman said...

Interesting times Laura.
I've been told one of my credit cards (Mastercard) is being cancelled effective Nov 1.
I pay it on time but they're making diddley squat on me. That used to be a GOOD thing. Now it's bad when you're not paying 29% interest on the widgets you bought a year ago.
Back to the mattress, I say.

Steve said...

Christ, there is nothing worse than new converts. I guess the banks have adopted a more puritanical approach in response to the precipice that opened up at their back this years and also in the idiotic belief that this new "we're the bank that likes to say no with your money" is what we, the public, want to see. You hit the nail on the head. A bit of honesty and transparancy is all we want to see. And a bit of respect for their customers and our money!

urko said...

In a way this isn't new - as that famous Mark Twain quote attests.

Sadly, the fact that no government is doing anything serious about this just proves that banks and big business are basically in charge and can do pretty much whatever they like.

Steerforth said...

I like the Daily Mail story, although I felt less sympathetic towards Mr Hope when the article mentioned that he ran a "property portfolio" and had a "buy to let" mortgage.

Like the banks, he wants something for nothing.

The Poet Laura-eate said...

WWW - I think you're right there. You'd get just as much interest sticking under a mattress.

Steve, isn't it ironic that what Nick Leeson was once jailed for today's bankers received obscene bonuses for (ie gambling with our money).

Urko, Mark Twain would indeed scarcely raise an eyebrow. The startling thing about his writing is how modern it is. And he didn't even live to see the 1929 depression. And yes, it is scary that the power of (big) business now dwarfs the relevance of government.

Steerforth, well you can't really blame people for being tempted by 'Buy to Let' as an extra income when they see their final salary pensions disappear and realise pensions are not to be trusted in any case after Robert Maxwell and all the others who followed in his wake. But yes, it also locks first time buyers out of the market as buyers as there is nothing left that they can then afford if the Buy to Letters have snapped it all up.