Friday, 16 March 2012
Hooptedoodle #46 - Banks - Why?
Banks are an easy target these days - bank executives are right up there with serial killers in the public affection. Not much of a challenge, then, to stir up some bile about banks, so why bother, apart from the chance to generate some hate mail from indignant serial killers?
I was in my local bank branch this morning. I stood in a longish queue for about 15 minutes while the only girl on the customer desk attempted to explain to an 80-year-old the differences between two equally uninteresting savings accounts - and I do mean uninteresting, as in little or no interest. I amused myself by recalling an ancient story from my former working life - so, to get things off to a really pointless start, let's get the digression in early...
Back in the 1970s, for a while I was involved in managing pension schemes for an insurance office. One of our high-profile customers was a very large shipyard - I cannot remember how much the executives of this firm paid themselves by way of pension, but the workers in the yard got a princely £6 for each year of service - so if someone was a paid up member of the scheme throughout a 40-year-working life, with no interruptions, he would rack up a staggering £240 per annum. That's £20 a month, folks. Even in the 1970s that was peanuts. Anyway, the point of this story is that one old guy coming up to retirement was outraged that this pension scheme insisted that he open a bank account, so that his pension could be paid into it on a regular basis by means of whatever passed for automation in those days. His family had never had a bank account - only toffs had bank accounts - he really was very put out about this. His employers and my own company made this a show case - they put a lot of trouble into winning him over. He was introduced to the bank manager, and there were photographs and a lot of hand-shaking, and he was given a personal guarantee by the manager that his money would be well looked after, and he could come in whenever he liked to check that everything was OK.
Great. Much self-congratulation all around, and the shipyard prepared to use this new convert to help persuade his mates to perform similar acts of class betrayal. After a few weeks, he did in fact turn up at the bank, who took photographs of him being shown his money. Then a few weeks later it all went disastrously wrong when he came in and asked again. They managed easily to find enough cash to show him, but he had taken a note of the serial numbers on the previous occasion, and this patently was not his money. What had happened to his money - what had they done with it? Appropriately outraged, at one point he said that this proved everything he had always suspected about banks, and that it just went to show that he'd be safer keeping his money behind the clock.
Over the years I've had a few chuckles at that old story, but recently I find that I'm starting to come around to his viewpoint. What advantages, I ask myself, does a bank account offer over keeping the old green stuff behind the clock? I spent a little time looking around the internet this morning, to see how the banks themselves try to present this anti-clock argument, and I picked up a few fairly traditional one-liners. Let's have a look at a few.
(1) Security - the bank is much safer. Erm - only to a point. The chances of a ruinous hold-up are minimal, true, but the fund managers themselves have shown a remarkable tendency to drop the ball recently, and the external guarantees which are underwritten by third parties are limited in scope. Watch the small print. Hmmm.
(2) Investment - they pay you interest - give you a share of the gain they make from the use of your money. You have to be joking. They pay nothing at all unless you are a new customer, or an existing customer who is patient and involved enough to spot the optimal time to switch money into a new account (and how much of the admin budget does that waste, quite apart from the customer's own time?). For the elderly, or the confused, or the uninformed, or the non-online this is a shameless scam. Thank you for the business you have given us for all these years - you mug.
(3) They can use their expertise to make modern life so much simpler. Really? I recently spent an unrewarding few weeks trying to set up a discretionary trust to provide security for a disabled relative, and no-one in my bank knew very much about it. I had to do my own research, pretty much, and had to pay my own lawyer to provide legal services that the bank felt unable to offer. The legendary girl-on-the-desk knows little about the products which she services, though she is just itching to arrange a meeting for you with the resident financial adviser, who comes in only on Thursdays, and appears to be half way through the banking exams. You want to ask about your business account? - I'm sorry, you'll have to ring this number. You want to send money overseas? - I'm sorry, it will be cheaper and less infuriating if you do it yourself, online.
(4) They can help out in more difficult times - with advice or a loan. Do not, under any circumstances, overdraw your account or we will take your children hostage. There may not be much interest going out, but by gum there's plenty coming in. If you want a loan, you have no chance at all unless you can clearly demonstrate that you don't need the money.
(5) They are nice, helpful people to deal with. "And what are you up to today, then?" asks the girl at the end of my 15-minute wait, while she is sorting out my transfer. I feel my blood pressure rising. I breathe slowly. "Oh, I thought I'd spend the morning standing in a queue in the bank," I say, "how about you?"
She sits there, several metres below my rapier-like thrust, and blinks charmingly. "Oh, I work here," she says. So that explains it. If I wish to discuss anything more intricate than my immediate tactical plans for this morning, I will have to phone up another young lady, in New Delhi, and if I do not follow exactly the script which she has in front of her then we will get hopelessly confused. Best not to ask - just keep your head down and be grateful. As for the petty chat from the girl in the branch, I do realise they are trained to do this. It is a mistake. I do not want my bank to be my bloody friend. It kind of adds insult to injury.
(6) It is good for one's own credibility to share in the corporate image of a well-known bank. Yeah - right. During the setting-up of the aforementioned trust, I went through the customary contortions to satisfy the anti-Money-Laundering regulations (which I do realise are necessary, thank you), and also had to pay my lawyer for the time he took going though the same process, since he is one of the trustees. A less respectful punter than I might easily stop and say, "Just a minute - it's you that is the bank - based on recent performance, which of us should be satisfying the other of our credentials and trustworthiness?".