Banks need to be more honest about charges, say MPs

Banks lure in customers with misleading introductory offers, said the new chairman of the Treasury Committee as he launched an investigation into banking competition.

Markets

Other markets

Market Data Notice

More market charts

by Deborah Hyde on Jul 13, 2010 at 16:36

Most bank customers do not know what they are being charged and are being misled by the banks, said Andrew Tyrie MP as he announced a new investigation into competition in retail banking.

'Too many consumers have no idea about how much they are being charged,' said Tyrie, the newly appointed chairman of the influential Treasury Committee, which is formed of MPs from across political parties.

Speaking at the British Banker’s Association annual conference in London, Tyrie said many so-called teaser introductory deals do not live up to their promises, saying 'free banking is not free.'

He said there is 'strong evidence' banks are abusing their position and hiding charges.

Challenged by a banker in the audience that it was up to consumers to be better educated about finance, Tyrie likened the experience of customers choosing a financial product to a customer in a supermarket.

He said: 'If you are buying soup you do not need to find out everything about it. You assume there is a level of regulation that ensures it will not give you food poisoning.'

And Tyrie said banks were not lending enough to viable British businesses, saying many are struggling to find 'bank support at reasonable prices.'

That echoes concerns by the Institute of Directors which published a survey today showing one in three firms that have applied for finance have been declined and lending criteria have become more restrictive.

This is in stark contrast to claims by RBS chief executive Stephen Hester that '85% of SME applications for lending are successful.'

At the conference Hester had said it was important banks challenge myths about them including the 'impression that banks have little interest in supporting small businesses.'

Email a friend

Email me when someone comments on this article Print

7 comments so far. Why not have your say?

When will the general public see that banks are in their business to make has much profit as is humanly possible and if ripping joe public off is a good way that's what they will do and all the piss and wind from some MP gobbing on about them is just par for the course,

Get wise you live in rip off Britain, you poor suckers, ps, i live in cambodia.

report this

MP's and honest in the same line - surely some mistake.

MP's telling banks to be more honest hmm ! Lets ponder that one for a while shall we.

report this

Great bit of back covering for the banks. Let a few MP's make some steam about how badly they are treating the customers, whilst the old boys in the background have given carte blanche to them to stick Joe public for every penny in order to restore them to profit. we are all paying heavily for the mess that the banks made of the economy and will continue to do so for years.

probably the only way to recover some of that cash is to buy banks shares they are going to be the most profitable businesses over the next 10 years and no government is going to stop that.

report this

It is surely time for the government to acknowledge that in the present climate Banks are simply not interested in lending to SME's especially if they are have any association with property or construction. Legislation needs to be put in place to force the State owned banks to meet government commitment to support small business and be seen to do so.

The two finger approach being adopted by Banks to the government is simply not acceptable.

When will the rhetoric stop and be replaced by decisive action?

report this

Do we really want the govt to run the banks - tell them to whom to lend to etc ? Recipe for disaster. Think this govt too sensible for that.

report this

There have been a series of Competition Commission enquiries over the last 10 to 15 years. They have found the market to be highly competitive for most products.

For some lending products the market became too competitive and banks got into trouble by charging interest rates which were loss making. Banks are still suffering from charging low interest rates for some home loans and some loans to large property companies.

Politicians are not capable of undertaking a competition review. They will just play to the electorate.

report this

Rob Moore

Jul 14, 2010 at 19:52

I have just left Barclays Bank for charging me repeated fees for going over my overdraft by a few pounds. My father also left them after holding an account for over 50 years and working for them for 40. He said they were now more concerned about profit than customer service

report this

Please sign in here or register here to comment. It is free to register and only takes a minute or two.