Bank customers are losing confidence in our banking system. Every day there are stories about the less than honest practices some of our banks adopt.
For any industry receiving 11,000 complaints a day there is a clear message that does not need a plain English explanation.
A common complaint is that attractive interest rates offered when a new account is opened disappear within months to be replaced by a very low rate. The change will have been announced to customers within the inside pages of certain newspapers, as the law requires, but most customers will not be aware of it. If they don't know, they will not have the chance to change their account and will be stuck with low interest on their investment. It does raise a suspicion that maybe the banks don't want us to notice the announcements.
And if we do notice an announcement in a newspaper, will we understand it?
Consumer Focus, the independent consumer action group, is one of only three bodies with the authority to raise a 'super-complaint' with the Office of Fair Trading (OFT). After the public outcry over the 'hidden' drops in interest on Cash ISAs, Consumer Focus used their authority to raise their concerns with the OFT, leading to an investigation.
In 2008, a public inquiry by the OFT and the Competition Commission, into the banks' information for customers with personal current accounts recommended that key fact information be provided by all banks.
The recommendations were taken up by the banks in Northern Ireland in 2008 and this recommendation was rolled out to the rest of the UK banks in 2009.
Plain English Campaign believes that:
- each bank should have a range of basic products;
- each product should be easy to compare between different banks; and
- information about the accounts should be clear.
Even the banks lost confidence in the banking system when the credit crunch started. All of a sudden they could not be certain that they would get back money they lent to other banks. Banking has always relied on 'confidence' to allow money to be lent and borrowed. The confidence evaporated almost overnight and the lack of trust led to the worldwide banking system becoming paralysed. Only huge loans to the banks by governments around the world (quaintly called quantitative easing) eased the paralysis a little.
Over the last two years the banks have been mending their balance sheets by paying their customers less interest and charging more for the services they provide. As a result, they are now making huge profits which they are ploughing back into reducing their own borrowings. Payments of bank staff bonuses have made regular media coverage. Despite these profits, customers wishing to borrow to money to buy things, such as houses or cars, now have to pay huge deposits or provide extra security.
The credit crunch and action taken by Central Bank's have led to today's very low interest rates. These are helping many borrowers but are penalising savers. Mortgage payers generally are better off at the moment because they are paying much less interest than they were a couple of years ago. But savers are suffering because the interest they get is much less than the rate of inflation. They are losing out because their savings plus interest will buy less than they would have before the 'Credit Crunch'. This is very worrying for people relying on their savings to give them an income.
And, even with government guarantees for depositors, bank customers are still scared of putting their money in the bank. Many of them have resorted to keeping cash hidden in their houses because they feel it is not worth the risk of using their bank when it pays such paltry interest.
So the lack of confidence is still alive and well. Perhaps clarity and honesty all round is the way to restore that trust.