Monday, 19 December 2011

Banking reforms should only be the start - pt 1

There has been welcome news over the weekend on Banking reforms. Firstly Vince Cable confirmed that the Vickers report would be implemented in full. This is great news as it stops, to a large extent, the future prospects of our country being held to ransom by casino banks. Also welcome are the proposed restrictions on mortgage lending - to stop people being lent money they can't afford.

But for people at the moment we have a real problem, with banks squeezing every last penny from consumers while they restrict their credit lines. Despite all the talk of banks being more understanding, they are continuing to charge massive charges for people going overdrawn (the news of a Santander APR of 819,000% being one of the more startling). Now we see state owned banks RBS/NatWest and Lloyds restricting access to cash from basic bank accounts to their own ATMs. This has massive implications in more rural areas where there is often just one (if that) ATM with a very expensive and irregular bus ride to the nearest next one. We then saw Barclays triple the charge for a missed Direct Debit to £24 on basic bank accounts, which are held by the people most likely to be in trouble and who would find it hardest to recover from the impact of these charges.

Banks argue that if they don't put these charges in they will have to charge for accounts. Of course this is rubbish. They could forgo profits to be socially responsible. It seems that the only way to get them to do this is to legislate on maximum charges and to stop them restricting ATM usage. I'm always reluctant to urge legislation but when banks refuse to change it is needed. In the meantime, we should be instructing state owned banks to at least not do these things.

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