Business secretary, Vince Cable, has launched a scathing attack on the big High street banks describing the banks’ rip off culture as “ingrained” in the market.
Over the last ten to fifteen years the SME sector have been highlighting the dilemma faced by them and especially the micro sector which embraces the CTN and Convenience sector in securing finances at the right price. A few years ago there was the famous Cruickshank report which painted a picture of overcharging by the big banks amounting to billions of pounds, and did the Treasury take any action? Obviously not. The report has been collecting dust in old Treasury archives.
But now thanks to Vince Cable the issue has surfaced again poignantly. He has accused the big banks of making excessive profits and employing staff focused on earning bonuses for selling products rather than on helping customers. We have heard it before.
He has also recognised that the culture of competition does not exist. So the question is how do we correct this scenario? In a free market economy there are two fundamental features: one is obviously competition and the other is regulation. The regulatory framework is provided by the Bank of England and the FSA. Lately the FSA has been sharpening its teeth by imposing heavy fines on big banks for neglect of customer care and mis-selling of products. But there is a long way to go. This is only the tip off the iceberg.
In the meantime, it will be good to see the old fashioned Bank Mangers rather than Relationship Managers who have no decision making powers and no knowledge of the local business and their requirements. Small businesses owners, industry experts and former bank managers are now calling for the old fashioned Managers to come back. They do not want remote controlled loan approval and time consuming practices.
I say well done to Vince Cable and eagerly await some positive actions.