Monday, 27 September 2010

Bank Charges - Back to the Future?

So far, I have avoided deliberately any comments on the role of the OFT.  Why?

Because I believe that we need to concentrate, not on the role of the OFT, but on the role of the FSA to resolve this question of fairness in the matter of Bank charges. I have long ago concluded that resolving the issue fell directly under the control of Lord Turner and the FSA.

Now it is one thing to hold an opinion on something, it is an entirely different matter to establish "beyond all reasonable doubt" that the opinion is validated by evidence, that is what I will now attempt to do.

First therefore what would constitute evidence that would justify my opinion "beyond all reasonable doubt"?

I think it needs to meet a minimum of three criteria, but for good measure I have chosen four :

Let's call them the four crucial Tests:

Test 1 - Evidence that the Financial Services Authority regard "Treating Customers Fairly" as fundamental.

Test 2 - Evidence that the Financial Services Authority have failed to meet the statutory obligations imposed on them by Parliament.

Test 3 - Evidence that the Concordat agreed between the Financial Services Authority and the Office of Fair Trading established the basis for real consumer detriment and serious regulatory failings.

Last, but very very far from least ...

Test 4 - Evidence, which must be irrefutable and unequivocal, that the Financial Services Authority expect charges to be a fair reflection of the additional administration costs faced, not a way to increase profits or offset costs from other parts of a business.

The evidence that will follow meets those criteria and passes each of those tests - and more. They will also lead to other issues where consumer detriment has arisen due to very similar and very serious regulatory and political failures.  The questions over Bank charges are important in themselves, but will also point the way to other similar issues.

But do we we need to go back a bit in time? Not only to help us understand the present, but also as an essential basis for understanding and preparing for the future.  A future where the role and scope of banking is already under the microscope, and where any failure on the part of Governments and regulators to get it right, once again leaves ordinary individuals to pay a heavy price, in taxes, in cut backs and in jobs. It is the present we all now face, and understanding the past which brought us here, may allow us to change the future.

The next items of evidence I intend to present, therefore, are intended to offer evidence against Test 1.  It will start in 2007, with a review of the Banking Code ... and the FSA's involvement in that review. 

What did the FSA say to the Banks about being fair to their customers?

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