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EDITOR’S BLOG: Licence to print money

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11/04/2007

The banks have come in for a lot of stick in the media lately and, quite honestly, you can see why we get the hump with them.

Ever-accelerating profits, and payments to executives that seem to defy the laws of financial gravity, are bad enough. But ally that to a suspicion that their treasure chests of loot are actually being filled with cash scooped from the current accounts of mug punters like us – their own customers for pity’s sake – and you have a recipe for hostility as fiery as Madras curry.

Barclays even paid one of its top guns, the aptly named Bob Diamond, the princely sum of £22m last year, although most of it was in the form of performance-related bonuses and shares. To be fair, he is the boss of the investment section rather than retail, the bit that sullies its hands with the likes of us, the chain-store be-suited masses who routinely juggle utility bills, council tax, school fees, bar bills and mortgages in our day-to-day lives and sometimes hit a few snags along the way.

So is the bile we reserve for banks a fair reaction on the part of downtrodden serfs to cynical and mendacious manoeuvrings on their part? Or are we being rather unfair to a crowd of rather good eggs who give our money a safe home and who deserve every penny of profit that they earn?

Well, possibly, but you have to say that the banks do not help themselves much of the time. The latest wheeze dreamt up by the Royal Bank of Scotland involves charging its credit card customers, who forget to inform it of a change of address, £12 for tracking you down. This idea smacks of mean-mindedness and humbuggery, and you can almost visualise a committee of hatchet-faced Scrooges vying with each other to come up with ever more fiendish ways of wringing blood from stones.

Much of the banks’ advertising tries to convince us that they are our best pals who will go to any length to lend a helping hand. What you too often seem to get from aforesaid hand is a smack in the mouth or, in this case, a bill for £12 for what may be no more than forgetfulness at a time of maximum stress.

Then there is the thorny issue of bank charges that doughty Tom Brennan, who is now a barrister but was once an impecunious student, like so many others, is challenging in the courts this week. He ran up £2,500 in penalties on an unauthorised overdraft when he was a law student – and he wants the money back.

“I am arguing for what are called ‘exemplary damages’,” he tells the BBC. “Where a company acts unlawfully and then takes unlawful profits from a person they should face a substantial level of damages to strip them of those profits.”

Brennan sounds like a nice boy to me, with a firm grasp of fair play, but you can bet your bottom petrodollar that the banks will be quivering in their handmade Italian brogues as judgement day approaches. If he gets a result, and does not get paid off before the hearing, then a legal precedent will possibly be set that will open the floodgates to millions of bank customers, all seeking redress for grossly unfair charges levied over the years.

And this is where the banks could have done with showing a modicum of fair play themselves. We know they are businesses with shareholders to appease, but to sting your own customers, say, thirty quid, for a letter that cost no more than £2.50 to cobble together and send is just asking for trouble. They could do with really being as friendly and even-handed as all that expensively constructed advertising suggests them to be. The one that first achieves this, and gets rid of unfair charges, will doubtless double its current profits and win the gratitude of a nation.

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