Ruminating on the free banking debate earlier this morning, it occurred to me that this probably isn’t the best time for banks to be asking their customers what financial products they are prepared to pay for, and how much they are prepared to pay for them.
RUMINATING ON THE free banking debate earlier this morning, it occurred to me that this probably isn’t the best time for banks to be asking their customers what financial products they are prepared to pay for, and how much they are prepared to pay for them. Given the trouncing some of the UK’s biggest banks have had recently over alleged dodgy dealings, most people’s answer would probably be ‘Nothing’. Indeed, many are already paying far too much for the most basic transactions, as an email thatlanded in my inbox this morning reminded me.
Displaying an ingenuity that would surely be better used on reforming their practices and improving their products, some UK banks are apparently exploiting the need of expat retirees to transfer their pensions overseas. According to research published by TransferWise today, banks have ‘turned foreign transfers into a half a billion pound a year river of gold’. The research claims that banks use a combination of sky-high transfer fees — somewhat disproportionate to the click of a button required to electronically move money between accounts — and poor exchange rates to pocket £419 million a year from the one million British pensioners living abroad.
I am usually deeply sceptical about research and reports like this, but I can believe the results of this one. Banks have a penchant for charging ‘administrative’ fees for the most straightforward transactions such as withdrawing cash, transferring money or offering overdraft facilities. That they are apparently swindling UK pensioners out of sizeable chunks of their pensions to increase their profits is hardly surprising. Just another entry in the catalogue of dishonesty and greed to which UK banks have contributed so much recently.
It has also emerged this week that RBS is being investigated by the US Federal Reserve and the Department of Justice after information submitted in its half-yearly report. What all of this shows is that it is too early to have the free banking debate. Before they can have a reasoned discussion with their customers about the cost of its products, the UK’s financial sector needs to regain their trust and respect. And by the looks of it that is going to take a long time.
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