Blackfriar: Rate-fixing scandal has finally proved a tipping point

Consumer disgust with the banks has hit a new high.

A critical point has been reached when anger takes over from apathy and people actually do something instead of bellyaching.

People disliking their bank is nothing new.

According to bank satisfaction surveys around half of us loathe our bank.

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So why are people willing to switch accounts now when dislike of the banks has been going on for years?

The turning point is the Barclays rate-fixing scandal.

Yes, frustrated NatWest customers were pretty peeved when they couldn’t get any money out of the cashpoint, but it was more of a nuisance than a reason to switch accounts.

What makes Barclays’ interest rate manipulation different from all the other bank scandals is the possibility that people have paid more for their mortgage or loan than they would have done if the bank had behaved itself.

While bankers were universally detested for the greed culture that fuelled the bank collapses of 2008, customers didn’t feel that the banks had been stealing from them.

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The fear now, and it’s a very contagious one, is that hardworking folk have been diddled by the banks.

The worry is that bankers’ greed and their absolute lack of interest in anything but their bonus packages have resulted in thousands of people losing their homes as they couldn’t afford the mortgage repayments.

While only a small percentage of mortgages are directly linked to the Libor rate – the interbank lending rate that Barclays fiddled – banks used Libor rates to set the interest charged for mortgages and loans.

There is a swelling tide of anger and disgust that is tipping people over the edge into taking action.

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‘Martin’s Money Tips’, the regarded email from moneysavingexpert.com, sent this message to subscribers yesterday: “Bank a b*****d? Don’t whinge, leave.

“It’s hard to believe banks’ reputations could get worse. But the RBS/NatWest screw-up and Barclays’ moral bankruptcy have sunk them even lower. Let this be a catalyst for EVERYONE to ask: ‘Can I get a better bank?’ Most big banks, including Barclays and NatWest, have poor rates and bog-standard service ratings.”

Speaking yesterday at a Shore Capital seminar entitled ‘How other UK lenders are benefiting from the retrenchment of the big banks’, Tesco Bank’s chief executive Benny Higgins put his finger on the change in mood.

“I just feel when I talk to people that the mood music has changed. I think trust in the banks has been eroded. I want to build a business that can stand by what it’s about.

“My instinct is things have changed,” he said.

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Speaking at the same seminar, Metro Bank’s chairman Anthony Thompson said nothing is more important than customer satisfaction.

“Some banks think they are only in the business to make money,” he said.

“That view has led to some of the disastrous consequences we’ve seen in the past two months. There is a massive level of dissatisfaction.”

Mr Thompson also identifies another change, as shown by the building society customers who have been flocking to the Yorkshire and Leeds BS to say how pleased they are their money is safe in a mutual.

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“There has been a great increase in distrust over the past few months,” said Mr Thompson.

“Dislike has been there for a long time but the distrust is new. We’ll see how that pans out over the next few months.”

The announcement that there will be an inquiry into Barclays and other banks’ Libor rate manipulation is to be welcomed, but both Barclays and RBS need to do something more to appease their angry customers.

If, as is suspected, more banks are fined by the FSA over the Libor scandal, then confidence will fall even further.

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Bank customers are fed up and they need some concrete proof that their banks value them if we are to avoid such a dangerous scenario.

Barclays needs to fill the space left by Bob Diamond (or Bob Diamante as he’s been renamed) with someone who has the credibility to take the bank forward. And it needs to do it quickly.

If you have a view on this or any other City story please contact Blackfriar at [email protected]

Blackfriar has spent the last year chronicling the ups and downs of Yorkshire’s diminishing number of plcs.

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But it has to admit that at times it has been impressed with the performance of companies in the face of some very challenging trading conditions.

To this end, your favourite Yorkshire Post columnist invites the region’s best-performing plcs to enter this year’s Excellence in Business Awards.

The deadline for entries is close of play Friday. To enter, visit www.yorkshirepost.co.uk and follow the simple steps. Best of luck!

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