Fallout from Banks Fiasco Continues as Customers Look to Switch

The leader of the oppostion, Ed Miliband, said recently, when the Barclays Bank Libor fixing rates scam emerged, that there should be “at least” two “challenger” banks to be set up to break up the hold of the “big five” of Barclays, Lloyds, HSBC, RBS and Santander on the UK market. Miliband proposed that the major banks should then be forced to sell up to 1,000 branches to enable this, saying, “Let’s turn five banks into at least seven so there is proper choice for the consumer.” It appears that some people are taking this message to heart already as there are signs that people are becoming fed up, not only with the NatWest fiasco that saw many hundreds of customers showing an incorrect balance as payments had not cleared properly, but now with the major player Barclays fixing the Libor rates. Banking customers are making enquiries into alternative banking facilities and many of these are being directed towards either building societies or ethical banks.

There have been signs that people now will change their banks, as they simply are not feeling secure placing their hard earned money into facilities that con money out of the ordinary saver. So far, building societies have seen a 30% increase in the number of enquiries, and ethical banks are also reporting a similar increase for their products. For example, the Co-operative bank reported in the last week, a 29% rise in online applications, and Triodos, which is a ‘green bank’ who finance organisations from organic food and farming businesses and pioneering renewable energy enterprises, to recycling companies and nature conservation projects, has seen a 51% increase in applications for savings accounts in the last two weeks. The difference between the five major players and these two relative outsiders is that transparency seems to figure greatly in the last two banks. On the Triodos banks website, they show clearly who they lend money to, what their expertise is and show the annual reports, should you wish to see them. As Ed Miliband stated in his address last week, he wants British banks to be more open and clear about who they are lending to and who they will not lend to. He was keen to mention a law passed in the United States during the 1970s, which forced banks to publish details of the areas in which they were not lending. Some banks in the UK were already holding this information, he added, arguing: “We should collect and publish it.”

Two such challenger banks, the Co-operative and Virgin Money, are already receiving help from this government so if you want a fairer and more ethical way of banking then these are the two banks, as well as Triodos, that you should be looking into. You should always check out your local building societies, the only problem with banking with one of these is the unfortunate way in which large banking corporations seem to buy them out. If you are one of the thirty odd percent who are unhappy with the state of banks in the UK and are looking to change your account, make sure you get an account that has the right facilities for you and if you need a local branch, be sure to check that there is one nearby. As Mr Miliband says, he hopes there will become a time when “the term banker goes back to being a compliment rather than a term of abuse”. Personally, I cannot see that happening in the short term.