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Topics: Vince Cable
Vince Cable has launched a fresh broadside at what he said was banks’ “rip off” sales culture, which he said was "ingrained" in the market.
Britain's biggest lenders cheat their customers in order to make excessive profits, the business secretary said.
Speaking at a banking industry reform debate, Cable said bank branch staff were more interested in earning bonuses for selling products than helping customers.
"Competition is the best antidote to the rip-off culture which is ingrained in the banks... extracting excess profits from customers," he said, quoted in the Guardian.
"There is a cultural issue and there are two practical aspects to it. If you have people in branches who have a personal incentive to sell products that cuts across the traditional relationship.
"The other aspect of [that] culture, is most of the banks became very, very detached from local relationship banking and they do acknowledge that and some banks are trying to get back to that."
Cable's comments precede the publication in September of the Government-appointed Independent Commission on Banking's (ICB) report, which will recommend a series of reforms for the industry.
The business secretary is a member of the Cabinet banking committee that will decide which of the ICB recommendations to enact.
A year ago, Cable made similar comments about high street banks "ripping off" their customers.
It followed the disclosure some were charging up to 167% interest on unauthorised overdrafts.
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Business Banks
A couple of my clients have recently been re-negotiating their borrowings/overdrafts etc and have been presented with an ultimatum. Apart from increasing the interest rates, the bank (in both instances, dual branded and owned in the majority by the UK tax payer) will 'take' a percentage share in the business (for no financial outlay) and the company can buy back the shares at a future time (when the bank considers that the 'share value' is right for them). Looks like Butch and Sundance have made a return. In this instance, I am totally supportive of Vince Cable, and I sincerely hope that he gets all the support from his colleagues to clean up the banks, both retail, business and their 'financial sales services'.
Posted by: Paul
Banks "rip off" culture.
Vince Cable calls it right again like he has done on so many issues. Unfortunately the rest of the politicians don't listen to him and he does not control the levers of power. Those who do make a lot of noise about what they are going to do but are afraid of the banks or on their payrolls and end up doing little or nothing. Shades of Murdoch and News International about this.
Posted by: John Smyth
hallelujah
Thank God for Vince. If only he could have a look at the FSA.
Posted by: Bob
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Rip Off Banks
I absolutely agree with Vince Cable. The Banks' treatment of retail & small business cutomers is nothing short of criminal. The banks say they are lending to small businesses but this is a total fabrication - falling money supply numbers in the UK would appear to back this up. What they actually do is effectively call in overdrafts and re-lend as a loan with a chunky 'arrangement fee' and an extortionate interest rate. Oh, and they'll shore up the deal by taking your house and a personal guarantee as security. They then tick the box as having passed yet another successful loan application. In financial circles, this is known as 'churning' is it not?
Posted by: Richard