Think cockney rhyming slang? This starts a bit “off message” but bear with me. Over the weekend I got my bank statement and noticed that I had been charged £1.99 to withdraw money from a cash point machine (ATM) last week (outside University of London Union, Mallet Street) after a Labour Link meeting. Being the son of a Scot (Aberdeen no less) I always avoid ATMs that charge. After seeing the statement I went back to check the cash point. See photos- it is a traditional looking “hole in the wall” ATM which had no warning signs on the machine that it charged for withdrawals. However, if you look closely at the screen you will see in small blue letters against a blue background “This machine will charge £1.99 for link cash withdraw”. If you double click the photo it is clearer. I’ve made a complaint to my bank and will follow this up to get my money back and make sure that there is adequate signage.
The consumer magazine “Which?” has campaigned for fee paying ATMs to be marked very clearly. They suggest that free ones should be painted green and charging ones painted red.
There is a wider issue than just me whinging about losing a couple of quid due to some sharp practice. Ironically the cost of financial services is relatively far more for the poor than for the wealthy.
Banks, building societies and post offices are closing down in less prosperous areas. If you can’t afford to run a car you may have no realistic choice about going to your corner shop to pay to use their ATM.
Not only that, but people who can only afford to buy their electricity or gas by a key meter pay more a unit than if you pay by direct debit.
Compare the horrendous cost of loans from “door to door” home credit companies such as Provident Financial who charge interest rates between “170% to 500%” with that of regular Banks. A loan of £200 paid over 23 weeks would result in £294.40 being paid (497%). I can borrow money from my mortgage provider at 6.9%.
The best rates for savings accounts can often only be found by those with access to the Internet.
This can only be regressive and result in further inequality. In such circumstances it is the role of government to step in and force companies to spread the cost over all customers and provide the same low cost access to loans and savings to the poor as that available to the rich.
The question is how? Any ideas?
6 comments:
I am afraid this government's love of red tape for business has pushed up the cost of doing any business to such a degree that the poorest in society pay an above average cost. As independent financial advisers are being pushed towards charging fees by this government, the only advice channel open to lower earners will soon be the banks with their dubious sales tactics.
Solution - remove the burdensome over regulation and that may encourage back some of the players and create some competition.
Failing that encouraging communities to set up credit unions (with all the regulation) may be the only solution
Nationalise the banks. Remove the need for shareholder profits!
“I am afraid this government's love of red tape….”
Sorry anon must disagree. IFA’s, who face it, were never truly “independent” while replying on sales commissions, were also never interested in the low paid or those on benefits.
Its not “red tape” that puts up the cost of services to the poor – it is the excessive pursuit of profit at the expense of the vulnerable.
I don’t agree either that there is “burdensome over regulation”. The regulations seem to be needed to try and stop the financial services industry ripping people off. Let’s not forget the scams - Maxwell, Equitable Life, Endowment mortgages, selling of Personal pensions, split investment trusts etc, and now Farepak and 1st Solutions (see what happens with no regulations!)
Yes – credit unions should be part of the answer as well.
“Nationalise the banks. Remove the need for shareholder profits!”...
Thanks anon but while I would support public ownership (not renationalising) of train services and monopoly utilities I don’t think that renationalisation of Banks makes any sense. Interestingly many people’s pensions are dependant upon the profit that Banks make. See previous posts on Workers capital. I have savings and pension accounts with the co-op, which I would encourage people to join (despite the current dispute over redundancies). Why doesn’t UNISON have/promote a trade union credit union? Must find out.
On the matter of Credit Unions - it came up at the London Region welfare committee and it was agreed that local branches must be seen to support local CUs. Lambeth LG is having its local CU doing a presentation to its next BC.kat
Well done Katrina – keep up the good work Lambeth BC! (Never thought I would hear myself………..)
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