If you have just reached this blog and wonder what it is about - this series of posts is primarily about Bank charges (and a bit more - how by using that subject it may lead us to a better understanding of how the failures of regulators, central bankers and governments got us into the financial mess many of us now face.)
I am using a very simple, but crucial, question on Bank charges, namely:
Let's ask Lord Turner and the FSA this very simple question:
Do you believe that the charges levied by Banks on their customers were and are fair or unfair?
In my earlier posts I set myself 4 tests - the following sequence of posts will address Test 3:
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.
Before I deal with why I think that Test is important, and why in my opinion it has indeed led to consumer detriment, and offer evidence in support of my opinion, I want to start from a wider perspective.
(Authors note: In a later series of posts, but not in this series, I will examine how the FSA/OFT Concordat may have led to a "price fixing" issue which also affected many millions of people in the UK)
When we use the word "fair", and as we discuss "fairness" both in general terms or as it may apply to this issue of Bank charges, are we applying a purely subjective assessment, perhaps one we learned as a child over whether we should share our toys with our siblings or friends, or when we were told the time to stop playing outside and come back inside?
Those early days in our lives - when we were heard to complain "But, Mummy, that is just not fair!"
Remember those days, you just like me, saw fairness in that way, did we not? Subjectively - as it affected us.
As we grow older, do our ideas of fairness and unfairness widen beyond our self interest? Do you buy "Fairtrade" coffee, for instance? Whilst still primarily subjective, it is wholly your personal choice whether to do so or not, does it begin to illustrate elements of objectivity, and most certainly move from pure self interest to concern for others and their place in the world.
Do our more adult ideas of fairness begin to form something important, a way by which we can show we care for others less fortunate than ourselves? Our place in forming the society, and world, in which we live, and to see our sense of what is fair play its part.
But does a gap in who and what we are, and the positions we hold in society create a gap? Those who seek an answer to the fairness or otherwise over Bank charges, an answer so far unspoken even by the Supreme Court, do so because it has affected them - many millions of them, but not as children. But is there a disconnect, a gap of understanding, between those affected, and the regulators who are appointed by law to offer consumers protection, bodies like the OFT and the FSA?
Amongst those in the adult population, some do indeed take on senior positions in the likes of the FSA, the OFT, or become the politicians who form a Government after an election, or take on roles at the level of the EU, or the United Nations.
Do the concepts of what is fair, of what constitutes fairness, move increasingly from the subjective to the objective, to matters of legality, of laws and of treaties - no matter that these are constructed from the subjective views of those who pass the laws, or sign the Treaties?
When that happens, how distant might become our childhood thoughts of what is fair, how far away might become our more adult thoughts on being fair to others, those who we do not know and may never meet?
Do those in high places, no matter how well intentioned, but through force of the pressures they face, always succeed in producing answers or laws which are without flaw or mistake? Are they always able to witness, at first hand, the unfairness they may inflict on others, or are they too high up the ladder to even see those affected? Did Sir Fred Goodwin?
Don't worry, I am not about to start a philosophy seminar, or embark on some personal polemic, I will in my next post start to provide the evidence which addresses Test 3. But in doing so, it will be issues of the nature I have just commented on which will prove of importance.
What is fair? What is unfair? The evidence that follows is related - I assure you - very specifically to the issue of Bank charges. It will trace its way back to something Lord Turner said (see an earlier post) about there being an unclear boundary, one that existed between the FSA and the OFT. It is what I referred to as "Mind the Gap!"
Can you, like me, detect the boundary, the gap, between what we saw as fair and unfair when we were very young and which we first detected in that call to come in from our mothers, and how perhaps we view the same issues of fairness differently as we grow older? A change from the purely subjective to something more objective.
That is the process we need to examine this issue of fairness over Bank charges. There is a boundary, a gap, between what one law may define as fairness, and another law or set of rules which may define what is fair and unfair in an entirely different fashion. We need to examine those boundaries, those gaps, to discover what they might tell us.
Bear in mind that the Supreme Court ruling did NOT bridge that gap, its decision was not about what was fair or unfair, but solely whether the OFT had any right to examine the question of fairness. The Supreme Court examined and tested the law chosen by the OFT for their purposes, and found against them. Is there another route to an answer, one so far denied to those affected?
Lord Turner has told us that such a boundary, a gap, exists between the FSA and the OFT. It is that boundary, that gap, that I will address in my next post.
Do the FSA and the OFT share the exact same view on fairness, do they work under precisely the same laws, or the same identical set of rules, the rules and laws that define for them individually, each to their own what is fair and unfair? What can we learn by looking very closely at the boundary that Lord Turner tells us exists?
Did the Concordat agreed to by the FSA and the OFT resolve problems, or by conflating very real issues, such as fairness, such as who does what and when, such as which law or set of rules to apply, result in real detriment to many ordinary people?
The answer to that question also lies behind my question:
Let's ask Lord Turner and the FSA this very simple question:
Do you believe that the charges levied by Banks on their customers were and are fair or unfair?
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