It's only taken Lord sodding Turner 10 years to realise something that some of us have known and been banging on about for 25 bleedin' years.
Gordon Bennett. What next? What next bloody sudden insight will these corportatist cretins have? eh? What?
We don't need no stinkin' objectivity
30 minutes ago
12 comments:
L, of course 'free banking' is a loss leader, but if you are careful about it, you can benefit from the 'free banking' without ever paying for any of the crap.
I would have preferred a link to a different excerpt from the witterings of 'Lord' Turner:
"Lord Turner told the MPs that that "easy credit is not necessarily good for first-time buyers" and that enthusiasm for forwarding unaffordable amounts to home buyers during the bubble had created a "clear tail of very harmful lending".
However, he added that the FSA would think about the balance between depriving sound borrowers of funding and preventing a repeat of the excesses of the boom."
Some take a little longer, Mark. Be patient with the dears.
MW, yep, got that bit too, but I failed to make the link thingy work. And yes, I know that one can work the system, but for a whole load of people who for one reason or another aren't as lucky/skilled whatever it's shite.
Sorry, don't agree, Lola. If banks scrap "free" current accounts, prices for other services will not drop. What's more, he's talking absolute nonsense about barriers to entry. We already have huge numbers of banks / building societies on the High Street, all competing. The biggest barrier to new entrants is just customer inertia.
The effect of charges for current accounts would be:
- (potentially) meaningful interest might be paid on current accounts - which would benefit people with wads of money at the expense of the rest of us
- fees for unauthorised overdrafts might reduce, which would benefit people who borrow the bank's money without permission at the expense of the rest of us
- bank profits would increase
Free is good....
May I just expand on this.
Look, I decided years ago that probably the key problem with retail financial services was absolute lack of transparency in everything. Every single thing was done to deceive customers and clients as to the true costs of any product or service. Stuff offered 'free' clearly wasn't. This lack of transparency leads to massive overcharging. Banking was at the forefront of this.
It's not that I in any way decry the usual marketing technique of loss leaders (I exploit them at every opportunity) but in FS the 'normal priced' items were/are vastly overpriced.
In banking the charges levied on unauthorised overdrafts and the like entirely subsidise free banking. This does not seem right to me. Banking is different to other services. It has a unique status as a trusted fiduciary. It then exploits this unique position and without any compunction mugs those who can least afford it. Yes, Yes, I know I know a lot of people are wholly irresponsible, but in my long experience in financial services they are genuinely the minority.
What I have seen are people on the margins forced to use banking services by government diktat and forced into the DD system and then when benefit payments arrive late, get charged heavily so that they then have even less money. Banks are not supposed to levy charges on benefits - but they do. Mind you the government forcing the banks to take on margin customers an forcing them to offer 'basic' ( that is wildly loss making) accounts are equally to blame. This is one of the fallouts from destroying the local Post Office system.
I have said before on this site that it's not the banks that are broken it's the system. It's a state sanctioned cartelised mess set up to exploit anyone at the slightest opportunity. It has not always been like this, banks were once useful intermediaries, a necessary part of successful capitalism. Now they aren't. They are just part of the out of control bureaucratic state.
For the avoidance of doubt I am not in any way anti-bank.
The fact that yet again someone from the 'Great and the Good' gets up on his hind legs and pontificates about this just does me 'ead in. Turner in particular has been the archetypal quango sitter. I know he's a clever bloke and all that, but to me he looks like the classic 'clever idiot'. Smart enough to know he's smart, and smart enough to oil himself a good life, but not smart enough to know he's not smart enough. A classic prince to not put your trust in.
end of rant.
AC I hope my 'additional' rant helps.
I agree entirely about intertia. But, a lot of people put up with bank A because they've tried banks B and C before and found no difference. Or they just know that in the cartelised system there is no differentiation.
It's alright for us (I assume) who are switched on to all this and have sufficient income etc to be able to access the free stuff and game the system, but a lot of people can't.
Personally I'd much rather know exactly the price I was being charged for my current account services and then paid more for my savings. And I can see how a bank may want to offer certain classes of customers 'free' services, only no-one sensible is ever conned by that. We all know that we are paying somewhere.
Turner is a plonker. Always has been. A rich man's Will Hutton. Fluent but empty.
Nonsense.
How much do you really think it costs to run a bank account with modern computer systems in place? It costs more money to mail me the advertising crap I get every month from banks I don't bank with than to run my bank account. It's not a loss leader unless they are utter incompetents.
The marginal cost to running a bank account is so close to zero, we can ignore it.
Even if that were not so I'm pretty sure that the fact that the bank has a load of my cash on deposit, charges suppliers every time I use my debit card, and charges my employer every time I am paid by BACS transfer, more than compensates them for whatever imaginary costs they might have.
Op. Not 'nonsense', 'exactly'.
I'd be happy to pay a reasonable fee for current accounts if (and only if) the money in them is held securely within the bank, and not subject to credit risk. Then we could get rid of the dangerous idea of taxpayer guaranteed deposit insurance, and allow more efficient market pricing of risk for the interest paying savings/investment products.
Ed. Eggsaktly
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