Imagine a world where banking is simple. There are no complex terms and conditions, no lengthy list of fees and charges. Just banks taking your money and paying you interest.
Sounds good, doesn’t it? The government agrees. Financial Secretary to the Treasury Mark Hoban announced at the Consumer Financial Education Body conference last week that it plans to launch a new range of simple financial products. “The government will make sure that families are offered the advice, information and products they need to plan their own finances wisely and encourage saving,” says Hogan.
We wonder if Hogan really knows what he is up against. The plan will only work if the banks go along with it. And why would they? Banks, as they so often demonstrate, are interested in profits, not helping their customers to sort out their finances.
And this isn’t the first time a government has attempted to help out the financially illiterate with simple products. The last government introduced so-called basic bank accounts, for example. These were designed to have no overdraft facilities or cheque books, but they do have debit cards and can be used for direct debits.
That makes them incredibly useful for anyone who struggles to manage their finances. You get the benefits – and in some cases discounts – of paying bills by direct debit but you can’t spend more money than you have.
However, despite all the social utility basic accounts offer, banks – while obliged to offer them – have made little or no effort to advertise them. One bank was so determined to avoid anyone applying for the account, says Simon Read in The Independent, that they complied with the government’s order to promote the account by placing an ad in the Financial Times – the one place where no one who actually needed one would ever see it.
The banks clearly aren’t going to help their customers even if the government tries to make them. So if we want financial firms to treat us better it’s down to us, the consumers, to make them. We have to stop letting them get away with terrible customer service.
If you aren’t happy with your bank’s service, switch to a better one. If you want a basic account, research them before visiting your bank to ask for the account by name. Much as the government would like to improve our retail banks by regulation, it really is only customers who will ever get the job done.