A Path to Better Banking; Commission into a Troubled Industry Listened to Your Views and Reports Today on How to Offer a Fairer Deal

The Mail on Sunday (London, England), June 13, 2010 | Go to article overview

A Path to Better Banking; Commission into a Troubled Industry Listened to Your Views and Reports Today on How to Offer a Fairer Deal


Byline: RICHARD DYSON

THE report of the Future of Banking Commission is published today. Orchestrated by consumer lobby group Which?, the commissioners comprised eight authoritative figures from a variety of backgrounds, including Business Secretary Vince Cable.

Chaired by Conservative MP David Davis, it was set up in the wake of the banking crisis to find ways of making banks fairer, safer and more accountable to customers - and to the taxpayers who had to fund their rescue. The commission broke new ground. It naturally questioned an array of City grandees, from the Governor of the Bank of England to the chief executives of the biggest banks, seeking their views on how banking could be bettered. But it did something else - it sought the opinions of the public.

As Financial Mail reported, roadshows, forums and polls were hosted around the country, seeking the responses of ordinary people. The commission also called as witnesses several members of the public, including one former rank-and-file employee of HSBC.

Financial Mail played a crucial role in soliciting readers' views, compiling and submitting them to the commission.

Personal Finance Editor Jeff Prestridge was himself a witness before the commission (see below), giving further voice to banking changes that Financial Mail readers wanted to see.

The commission's findings cover wide aspects of banking regulation and structure. But they also focus on practical changes that could benefit customers quickly and meaningfully.

These are the most important conclusions of the commission:

Simplify depositor protection

CONFUSION reigns over the current system where the Financial Services Compensation Scheme underwrites [pounds sterling]50,000 per customer per bank. The problem is that some banks, such as Lloyds or Santander, have multiple brands. So for instance, if you have more than [pounds sterling]50,000 saved with both Abbey and Alliance & Leicester (both Santander-owned), you are not fully covered, because both brands fall under a single licence and thus confer a total [pounds sterling]50,000 protection. The commission wants the [pounds sterling]50,000 limit to apply to every single brand, regardless of which bank owns the brand, to quash confusion.

It also wants 'signs on bank tills, websites and other material, clearly informing depositors how much of their money is covered'.

Give priority to savers' cash when banks fail

AT PRESENT, if a bank goes bust customers who are not covered by the FSCS must stand behind corporate bondholders in the creditors' queue. This is unfair as most of the corporate bondholders are large institutions such as insurers. A change in bankruptcy law should push consumers to the top of the ranks of creditors.

Launch safe haven accounts

AS Financial Mail readers stressed, there are unavoidable occasions - perhaps after a house sale, divorce or inheritance - when they need to deposit well over [pounds sterling]50,000. …

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