Jayne Dowle: High time we could bank on fair financial services

The Financial Conduct Authority has been criticised for not taking further action against the Royal Bank of Scotland Group, and its  treatment of its business customers. (PA).
The Financial Conduct Authority has been criticised for not taking further action against the Royal Bank of Scotland Group, and its treatment of its business customers. (PA).
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It won’t be much comfort to the millions of mortgage-payers stung by the recent interest rate rise, but a Yorkshire MP on an influential parliamentary committee is calling for a public inquiry into the handling of banking scandals.

Kevin Hollinrake, Conservative member for Thirsk and Malton and co-chairman of the All-Party Parliamentary Group for Fair Business Banking, has slammed the Financial Conduct Authority for not taking further action against the Royal Bank of Scotland Group, following an investigation into the bank’s treatment of its business customers.

He’s right to speak up, but in the middle of August, this won’t cut much mustard. The FCA is hardly going to muster all its staff from their sunbeds and force them to take this particular bank to task. And as for the bank itself, it will probably just shrug its collective shoulders.

In defence of the FCA, it’s doing its best in a difficult industry, like the energy watchdog Ofgem. In a perfect world, such regulatory bodies would not need to exist; we should be able to trust banks and companies to carry out their business without taking advantage of their customers.

However, it’s a lucky customer who gets through life without finding themselves held hostage. Let’s take that recent rate rise. As soon as the Bank of England raised the base rate of interest to 0.75 per cent, its highest level in almost a decade, banks and building societies slammed it straight to their mortgage and loan holders. In some cases by a chatty text, almost before the Governor of the Bank of England, Mark Carney, had finished speaking.

Most of us are still waiting for the next text, the one that tells us that the interest rate rise is also going to benefit frugal savers.

James Daley, director at consumer campaign group Fairer Finance, accuses banks of “passing on the pain” to those who manage to find a few pounds to stash away every month. “It’s been a problem for decades that the banks always pass the pain onto savers but not the benefits,” he says.

“It is particularly egregious after so many years of dismally low savings rates. The Government and regulators should put pressure on them to play fair at times like this. It’s not fair, and I think something needs to change.”

Sadly, the big banks, safe in the knowledge that they have survived some of the most testing economic times since the Second World War, will carry on. The regulator can only go so far. However, there are signs that it might be about to flex its muscles in our interests.

Last month the FCA published a paper asking for views on whether it should introduce new rules to impose a “duty of care” on financial services companies. This would essentially force them to always act in their customers’ best interests.

This initiative has been overshadowed by the furore over the interest rate rise, but it shouldn’t be discounted. James Daley calls it, “a subtle but potentially seismic change to the FCA’s current principles”.

This is because as things stand, the FCA stops short of placing an obligation on financial firms to always put their customers’ interests first. Imagine a world where credit card companies did not up their interest rates on a whim, where insurance companies did not automatically increase their annual premiums and where you could place trust in your bank to pass on interest rate rises across the board.

It is now down to us to play them at their own game; if we stay loyal, we lose out. It’s as simple as that. I’ve moved my children’s savings accounts more times than I can count, and every time the narrative is the same; an impressively high introductory interest rate for a few months, followed by the dismal realisation that their deposits are making peanuts.

We might check our online banking balance religiously morning, noon and night, but we’re powerless in the face of modern financial services.

With some rare exceptions, such as my own at NatWest in Barnsley, the wise bank manager who gives his customers the best service possible has been trampled into extinction by the relentless march of the call centre and computer algorithms which calculate credit scores.

It’s such hard work. Even a simple thing such as renewing car or home insurance involves several hours calling providers and ploughing through comparison sites in search of the best deal. These companies rely on customer apathy, but this is hardly fair. Those attractive 0% balance transfer credit card offers, for example, work on the fact that the majority of customers will not pay down their debt quickly enough and will end up saddled with hefty interest rates when they get to the end of their offer.

We don’t need a public inquiry. We just need fair and transparent financial services we can trust, whether we’re a loyal personal customer with £500 to our name or the holder of a multi-million-pound business account.

Let’s hope that the FCA is serious about forcing companies to care for their customers and treat them fairly.