Newly published results from the Which? Big Banking Debate reveal almost total mistrust among consumers in the banks, with 96% of attendees agreeing the banks act more in their own interests than those of their customers.
The event drew more than 300 consumers to discuss the major concerns they had about Britain’s banking sector, and offer views on how to reform the City. Several themes emerged from the night, with irresponsible lending, especially to those who are most vulnerable, a familiar topic. One consumer said: ‘Banks don’t value customers. They view us as cash cows.’
Bail-out is a cop-out
Attendees had little sympathy for the banks, with many believing that the banks will not learn lessons from the financial crisis, partly because they are seen as having benefited from taxpayer-backed bail-outs.
Consumers were angry that they are now unable to get a mortgage or decent interest rates on savings accounts as a result of the banking crisis. One said: ‘Banks were keen to lend to me before, now they don’t want to know.’
A lack of understanding of how to complain to the Financial Ombudsman Service was also raised. One attendee said: ‘The Ombudsman option can be daunting. It should be clear where people can complain and what the procedure is.’
There was also a feeling that the Financial Services Authority, which regulates the City, was not able to keep the ‘powerful’ banks in line. Many consumers felt that there was nothing they could do to change the status quo.
Banks generate confusion
The complexity of products such as pensions was another issue to echo across the Big Banking Debate. Several attendees felt that financial providers deliberately make it hard to understand products, using small print to extract more cash from customers in the form of hidden charges.
Routes to better banking
Attendees were invited to suggest possible solutions to the problems that lead to the banking crisis. Greater transparency was considered essential if trust in the financial system, as was a clear separation of retail banking and investment banking to avoid another bail-out.
This was an idea Bank of England governor Mervyn King advocated at a recent Future of Banking Commission select hearing. The Commission was set up to take evidence from a range of experts on the financial crisis and banking reform. Its remit is to consider the crisis from the consumers’ perspective and report its findings to the government in the summer.
Understanding of financial matters was widely viewed as important. Consumers were adamant that financial education should begin in schools, and it should continue through various life-stages.
It was also suggested that there should be some consumer representation on the boards of the banks.
A ‘fantastic’ event
Former shadow home secretary David Davis MP, who chaired the Debate and is chairman of the Future of Banking Commission said the mass turnout at the end of a working day shows ‘the strength of feeling that is out there.’
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.