An Open Letter To No 10

Open Letter to 10 Downing Street

27/09/2006

Banks Heist 20 billion Over Six Years.

Much has been made by the media on the scam merchants who, by fraudulently obtaining personal bank account details, strip the accounts. A criminal ploy that preys on the naiveté of people, who are on the whole, desperate for the lucky break that will get them out of the daily grind of consumer penury. Whether the motivation of its victims in disclosing the information is through naiveté, need or greed, the practice is regarded as theft and, should the perpetrators ever be caught, no doubt they would be prosecuted with vigour.

However there has since, October 1999 been a far greater scam imposed on the millions of account holders in the UK. These are the £25 - £35 default charges removed by the banks and credit card companies from their clients’ accounts. According to ‘Which’ £4.7 billion was the revenue enjoyed by the banks with this scam in 2005 alone so perhaps the £20 billion headlined could be regarded as conservative.

But now that the scam has been outed, though hardly in a manner that would seem to match the scale of the theft. No screaming headlines in the fearless press or prime time news coverage. No ministerial promises of action. Why? Is it because the mickle’s that maks the muckle has been taken from us the haemorrhaging consumers?  Can you imagine the headlines if the £20 billion had been stolen from the banks?

Which beggars other questions, which are perhaps even more relevant namely: why have the banks been allowed to perpetrate this theft on its customers? Much is said of the so-called Nanny State, but surely we should be able to rely on our government to see that the statutes and laws it enacts are adhered to. Or does the State Nanny only the mega corporations?

Recently (2006) the Office of Fair Trading has published a report on the charges incurred by defaults on credit cards. In a nutshell they have concluded the £25 - £30 charges were too high and that any charge over £12 would require proof of validity in relation to costs? Well it has only taken them six and half years and £12 is a lot better than £30. However their recommendation is not based on a reasoned argument, it is in fact more, of a reasoned excuse. We should not have had to wait six years, and £12 is still far too high a price for a computer-generated letter that isn’t touched by human hand until it gets to the postman. The letter is in fact only worth the paper it’s printed on and the postage. So it would seem the corporate Nanny isn’t too keen on disciplining its favourite wards.

You can, as an individual or small business, take your bank to court. A daunting thought for most, especially small businesses, even if the law is on your side, so cover yourself by setting up a new account with a rival bank. You see it is exactly this fear of the Goliaths that the Goliaths are relying on to retain most of their ill-gotten gains and they are impressively clever. If you do take them to court, and please do, they will eventually, tell you your claim has no merit but it’s for such a piddling sum it would costs them more to defend it, so they will settle the claim in full and by doing so prevent the court from finding against the banks illegal penalty charges. This is an integral part of their strategy. Fear or apathy will prevent most people from claiming. So even if the banks do have to pay back £5 or even £50 million they’re still billions ahead of the game. Who said crime doesn’t pay?

There is in reality very little between banks that would make one any fairer that the others. And, to a great extent they and the government have devised, encouraged and promoted the conditions where the individual can no longer choose not to have a bank account. In fact the similarity and excesses inherent in all of their charges could be construed as a clear indication they are operating as a cartel.

So why haven’t our media headlined this as the crime of any century? Why hasn’t our government been proactive in forcing the banks to repay all the money they have illegally gained? Deep down we all know why, we’re the irrelevant gullible consumed; they are the consumers. Or, could it be the political parties are in too much hock to the banks to rock their boat?

Post script:

You will have noted the date of this letter 27/09/06.

Since then the FSO have taken the banks to the High Court and won a decision that found these bank charges were excessive. In 2010 the banks appealed to the Supreme Court – consider the conditions the banks were in at this time? – the Supreme Court reversed the earlier decision in favour of the banks.

Since 2008, the banks, for many small/medium businesses and personal customers on overdrafts have doubled their interest rates at a time when they are getting their money from the Bank of England at half a percent.

Following the crash of 2008, we have had an expensive education on the idiotic practices of the banks and financial institutions generally. But as yet nothing has been done to convert this education into practice; neither by governments, regulators or the banks themselves. While it might be too much to hope for the banks to cry Mea Culpa – they after all, have through the ignorance or connivance of governments created a monopoly on money by its conversion from wage packet to electronic transfer and the ‘convenience’ of the plastic card that gives us access to the digits in our account – it surely beholden on government to stop such idiocy from ever being repeated?

It’s all very ‘convenient’ for the banks - in practice generally more convenient and profitable for them than it is for the customer. The question is, given the difficulties in tracking the expenditures of everyday living – is the convenience worth the price they extract for them having the monopolised ‘convenience’ to profit from and penalise those who have least, while they apply neither what they preach or practice to themselves?

How many austerities must we struggle against in order for the banks to recoup their self inflicted losses and re-trench there fraudulent practices?

What this ‘business as usual’ attitude does expose is, democracy in this country is a sham. Just as much of a sham as communism was in Stalinist Russia; or an avuncular autocracy was in Gadaffi’s Libya. Each and every one of these shams were all based on one foundation; foundations laid in the concrete coffins of fear.

They were all too big to fall; but they did. Go back to demanding a wage packet and folding money and so will the banks.

John Souter

28/02/11

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