Friday, 4 September 2009

Bank Rip Offs

Is it comforting to know that although we may now be significant shareholders in several major High Street banks, and paying handsomely for some time to come and for all the other things we have 'agreed' to, that the banks themselves are ripping us off too. Such gratitude.

Of course, if we were big institutional or private investors, they would be treating us very nicely with possibly big lunches, promotional events or even a few 'sweeteners'. But at the grim end of banking, we non-institutional investors are being ripped off right royally.

My knowledge of this came about by a unilateral move by my bank, who I shall call to save their embarrassment, HSBC. Oops. A couple of years ago, they welcomed me with open arms after I finally got so cheesed off with Nat West after 30 years, that I changed. Along with my Business Account, HSBC, make a fine penny out of me. On arrival, they rolled out the red carpet and gave me Premier Account status as I had the Gold Account with NatWest, which in fairness to them gave you a number of good privileges one of which was a £10,000 preferential rate overdraft facility and another was a £10,000 credit limit on the Gold Card.

HSBC offered none of that mumbo jumbo but told me this account used to cost £25 per month and was only for 'high value customers' only which in hindsight was anybody swapping from Nat West. Well after a few disasters on the Business side, which have not been addressed for over 3 months, I got my Premier Account statement yesterday to find that they had started charging me £25 per month. I looked for an anniversary or something but none existed. I looked for a letter - nope, none had arrived. I had received a sales call the week before but I had sent them away with a flea in their ear. No, this was something a clever bank manager had thought up and unilaterally decided to charge Premier customers with.

My feverish mind went into action and wondered if the £25 per month gathered from all the customers would in some small way got to pay for the vast bonuses at the investment bankers end while the consumer customers rotted as usual. I also scoured my new booklet to see what fantastic new privileges I received on top of the lack privileges I already had - but there were none.

So I called the number on the statement and went through the reams of security, not knowing my PIN as I rarely called people and just used the internet. The helpful chap in Northern Ireland told me that all Premier customers now had to pay £25 per month - had I not been told? Right, so what did I get. There was along pause - it appeared I got nothing, except the 'Premier' logo on my card, remembering the things I got at Nat West. The only way he could waive the £25 per month charge was if I earned over £100,000 a year in salary and bought one of their Wealth Management products or I had to have a minimum of £50,000 in their deposit account which pays naff all interest (note the stock market has risen 40% in the last few months).

I would have laughed but he was being serious. My response was, and what if I didn't comply - oh, I could be downgraded to a normal bank account. Asking what the difference was, he couldn't actually think of any. When I pointed out that if I was to shop around and see what new account I could get for my simple needs, what would stop me from changing banks? He offered to refund the £25 that had already been taken from my account without authorisation, which got me back to where I was at the end of last month. I asked if a manager could call me to explain all this, as part of the Premier package is a mysterious relationship manager which sounds more like a marriage guidance counsellor. Again a long pause - it may difficult to get someone to call me. I have to admit I offered a financial inducement - a bribe if you like. I said I would send him a cheque for £1 if a manager called me back today. I knew my pound was safe and sure enough no one has called yet.

Call over, I have looked at the web to see what bank accounts are available and my goodness I was shocked. Most now have some kind of monthly charge even for internet banking, either implicit or hidden depending on what you want. But here is the incredible part - most are offering overdraft facilities at around 19% (some more, some less).

Read it again - 19% APR. The current base interest rate has been pegged at 0.5% for the last 4 months and banks have repeatedly missed their lending targets. Here is a good reason - getting credit costs and arm and a leg. Meanwhile, they offer only 0.1%, if anything at all, if you have money in your account or some offer deals of up to 6% if you have an unreasonable sum in your current account. Suffice to say, HSBC comes well down the list of 100 ranked bank accounts with a punitive 19.9% should you go over the agreed overdraft limit at any time, for however long, as I have found out.

For the mathematically challenged this is nearly 39 times the base rate that they are earning. In some cases, like Nat West, RBS, Northern Rock and Lloyds they are actually charging us extortionate rates using OUR OWN MONEY.

It really makes you think, as we sit aghast watching the whole debate about bank bonuses, high risk investment strategies, regulation and the like, that the whole world relies on our utter stupidity and ignorance. We bail the banks out and they sting the consumers who did so by charging us ridiculous mark ups for borrowing back our own money that we gave or lent them, and they also want to pay excessive sums to the idiots who caused the whole problem in the first place.

Who is to blame? Well the daft idiots who decided on a bank bail out plan that just gave banks money without a single caveat on how it was to be used - the Government. It could not be a worse scenario. Take credit cards, loans, mortgages or overdrafts, the minimum multiple on the base rate is at least 6 to borrow our own money back. Banks are having it easy at every end of the spectrum as they have us by the short and curlies, make no mistake. We are damned without them and we are damned with them - and we missed the one opportunity to get more favourable terms, when they needed us more than we needed them.

I am still not sure how the heck I solve my problem with HSBC, but the one thing I learnt in my short research today, is that there isn't a bank out there who is offering a fair deal. It is such a pity that none of us had a say in the more than fair deal we gave them when we bailed the swines out.

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