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Bank customers: vulnerable victims or gullible gimps?

I must admit, having listened to Jeremy Roe regarding banks mis-selling swaps contracts along with Which? and the leader of bank employee union Unite talking about how general staff and customers feel about mis-selling, I’m a
little bit cynical.

Have banks behaved badly or are customers a little bit
stupid?

This occurred to me after writing up Jeremy’s speech about banks
bullying small business customers into contracts that protect them from
interest rate rises, and one person commented: “I wonder when the banks will be taken to court for not protecting customers
from interest rate rises?”

In other words there’s the one approach that is trying to
help the customer, in conflict with the other approach that lets the customer down
in a time of need.

Is it a case of heads you lose, tails you lose?

I must admit there’s a fine line.

It’s a little like insurance where, when you make a claim,
you expect the claim to be processed and, fi the insurer dodges the payment
through the small print, you cry ‘foul’. 
Banks are in a similar position.

It is the reason why the industry is known for selling you an
umbrella when the sun is shining, only to find the umbrella full of holes when
it rains.  Is this true?  Are we working in an industry purely focused
upon ripping off our customers or do we work in a business that is customer focused
and honestly trying to help?

I believe it is the latter and, for all the shenanigans of
LIBOR, swaps, PPI and more, it is purely a few rotten eggs and ill-judged deeds
that have resulted in where we are today, and not a systematically focused
industry trying to rip off their customers.

Don’t you agree?

 
Pickpocket

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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2 comments

  1. The road to hell is paved with good intentions.. surely banks are trying to help, but there are many unforeseen consequences from the enforced choices banks have to make in which customers they are trying to help.

  2. Thanks for picking up on my original comment.
    To expand further, what we have seen from the PPI & Derivative mis-selling reviews, is not that the ‘products’ were lemons, but the distribution [banks] & acceptance [customer] model was flawed.
    Looking at PPI for example, the ‘sale’ of loans wasn’t rewarded at branch level, yet a sale including PPI was. The PPI policy was effective & I knew many clients that were thankful of the policy following sickness/redundancy. But there was no central check that the policy sold was actually applicable to the client…
    As to derivatives, the client just saw [was told about] the up side, and didn’t bother to understand the full costs of the product on cancellation. At the time of taking a loan with rates at 5, 6, 7% & memories of 10, 11, 12% base rate, no one was really bothered about what happened if interest rates went below 3%, let alone down to 1/2%.
    In addition, I could never understand why the regulators/bank policy [I never knew which] prohibited the banks from reducing the loan interest rate for a ‘protected’ (either by PPI of Derivative) client – surely the bank’s risk on not getting repaid was less?
    Was the sale of these products profit lead? Of course; were the products from hell or overtly malicious? No, but certainly a double-edged sword.

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