We Must Now Rein in These Greedy Banks
Byline: COMMENTARY by Alex Brummer City Editor
THE new Treasury Select Committee is off to a flying start with its decision to launch a full-scale competition inquiry into Britain's banks. Its job, put simply, is to establish whether there are now so few banks left standing that customer choice is severely limited.
In the race to return to profits and strengthen their balance sheets, the high street banks look to have forgotten a basic principle: they are there to service customers and clients, and should not be in some mad race to stoke up earnings, salaries and staff bonuses at the expense of those of us who entrust them with our money.
Instead of winning back confidence by treating the customer well, they are ratcheting up interest charges to loyal clients, paying savers a pittance on their hardearned nest eggs and treating Britain's entrepreneurs - on whom our future prosperity depends - like recalcitrant schoolchildren who need fierce discipline.
What the banks hope the public will forget is that were it not for up to [pounds sterling]1trillion of taxpayers' money propping them up, several of the best-known names on the high street, including Royal Bank of Scotland (owners of NatWest) and Lloyds Banking Group (owners of Hali-fax Bank of Scotland) would not be here at all.
At least the new government is doing its best to bring control to these behemoths. The Coalition has launched a Banking Commission to investigate whether the big banks should be broken up. It has imposed a painful levy on the size of their balance sheets. And it is considering a so-called financial activities tax, known as 'FAT,' on the 'casino' trading activities in American sub-prime and the like which caused so much trouble in recent years.
But none of these measures deals with the core issue of competition and the ability of banks to set customer terms with impunity.
On the high street, despite the lowest bank rate in decades at just 0.5 per cent, the government-owned banks are relentlessly pushing up charges to personal customers, and making life as difficult as can be imagined for small and medium-sized enterprises.
Personally, I was stunned in the last 24 hours to return home from an overseas trip (to look at the crisis in the Greek economy) to find a letter and brochure from my bank, NatWest, informing me of changes in the terms and conditions which they offer. As might be imagined, it was not good news. Part of the new deal is that from September this year, Nat-West will no longer offer interest to customers who keep their accounts in the black.
AT the same time, it is raising the arranged overdraft charges from 17.73 per cent on its current accounts to 18.28 per cent. This at a time when it is able to borrow overnight funds from the Bank of England at 0. …