Avoid First Direct - They are gonna charge all customers £10!

EagerLearner

This point is being done to death - main thing is we will all find out in September what the real deal is. As an MSE believer, I still feel that £120 a year should be in my pocket and not the banks and if the deal isn't sweet enough, I'll vote with my feet pronto.

I cannot feel emotion for the banks, who since money began have been making profits from our money - want to keep me? Show... me... the... money... First Direct :rotfl:

Detail_Merchant

Hereward wrote:

True, but banks do not have to give all of their profits to their shareholders. Most, if not all, will retain some of that profit to reinvest in themselves, thus improving the service they offer, just as the Building societies do. As Copper plate stated, a large number of Building Society directors get bigger salaries and bonuses those of the banks as the members are less influential than shareholders in a Bank (I suppose it would also have something to do with the media focus on bank directors pay as well).

I'm not sure that the relative size of the director's salaries and bonuses implies that BSoc members are less influential than PLC shareholders. It could also be argued that BSoc members appreciate the benefit of paying for talent, whereas PLC shareholders are short-termist's who care more about this year's bottom line. Of course that interpretation is generous to the BSoc directors, but I'm sure the truth isn't as simple as "high salaries = bad".

The total remuneration for exec and non-exec directors at Nationwide last year, including pensions, was ~ £5.5 million. With 11 million members that comes to 50p p.a., which is a lot less than £120 p.a., but certainly worth keeping an eye on.

I'm certainly not committed to banking with a BSoc rather than a PLC. I currently bank with fd, part of a PLC. But if the banks are going to try to introduce account fees, then my guess is that Nationwide or Co-op will be the best bet for resisiting this, unless it is inevitable.

Hereward

Detail_Merchant wrote:

I'm not sure that the relative size of the director's salaries and bonuses implies that BSoc members are less influential than PLC shareholders. It could also be argued that BSoc members appreciate the benefit of paying for talent, whereas PLC shareholders are short-termist's who care more about this year's bottom line. Of course that interpretation is generous to the BSoc directors, but I'm sure the truth isn't as simple as "high salaries = bad".

The total remuneration for exec and non-exec directors at Nationwide last year, including pensions, was ~ £5.5 million. With 11 million members that comes to 50p p.a., which is a lot less than £120 p.a., but certainly worth keeping an eye on.

My point, and I think CopperPlate's as well, was more about value for money. If i was a member of a Building Society I wouldn't want the directors to be paid more than those of a large, corporate bank. I would expect the salaries and bonuses to be much smaller as they create less profit, which I would expect to be returned to the members.

I'm certainly not committed to banking with a BSoc rather than a PLC. I currently bank with fd, part of a PLC. But if the banks are going to try to introduce account fees, then my guess is that Nationwide or Co-op will be the best bet for resisiting this, unless it is inevitable.

Its a common misconception that the Cooperative bank (PLC) is a building society: its a whole owned subsidiary of the Cooperative Group PLC that just happens to be owned by its members (its shares are not traded on the stock market).

Detail_Merchant

Hereward wrote:

My point, and I think CopperPlate's as well, was more about value for money. If i was a member of a Building Society I wouldn't want the directors to be paid more than those of a large, corporate bank. I would expect the salaries and bonuses to be much smaller as they create less profit, which I would expect to be returned to the members.



Its a common misconception that the Cooperative bank (PLC) is a building society: its a whole owned subsidiary of the Cooperative Group PLC that just happens to be owned by its members (its shares are not traded on the stock market).

Re the Co-op, yes, I'm aware it's not a BSoc (I mentioned its status in http://forums.moneysavingexpert.com/showthread.html?t=226699&page=9#177), but I still think it will be a good bet if most banks try to introduce account fees. For example, from http://www.cooponline.coop/about_facts.html, "The Co-operative Bank in the UK was the first clearing bank to introduce free banking for personal accounts in 1973.".

Regarding the value for money comment, I'm not sure why a director should be paid less for running a large business that doesn't pay out some its profits as dividends than one that does, I would have thought that given a similar size of organisation, they are equally difficult jobs. I would have thought that paying much smaller salaries would make it very tempting for senior management to try to convince members to convert to a PLC, thereby increasing the senior management's salaries, possibly to the members', now customers', long term cost.

In the end, judging whether or not to bank with one organisation or another based on management salaries or ownership structures per se doesn't make sense to me. If one bank pays its MD £1,000,000 p.a. and charges me £1 for a service, and a second bank pays its MD £100,000 p.a. and charges me £10 for a service, I'm going to use the first bank. But in the case of possible account fees, I am guessing that Nationwide and Co-op will resist this change.

mancitychick

EagerLearner wrote:

Hi all,

Here is the e-mail response I got to my last e-mail - we all know it's going to happen anyway, but nice to get a more personal first paragraph at least, even if the rest is probably a template:

Re: Fees

Thank you for your message dated 02-Aug-2006.

I am sorry that you feel our initial response is impersonal but it is a matter of policy that we do not comment on market rumours or speculation.


.

This is the same the response I got today after my 2nd message (about there unpersonal response) to them on 2nd Aug. So I guess its another template too! Also as it has taken them since the 2nd Aug to reply, I am guessing they have been swamped with queries/complaints re this subject.

MPH80

A Fool over at MF has just posted this:

http://boards.fool.co.uk/Message.asp?mid=10115665

Looks like they are trying to get public opinion - but the idea is pretty far advanced from the text.

lswwong

I was also invited to partake in an online survey by FD. Though I was sifted out early - probably not having met an income criterion (though I earn pretty okay!). So I never got to see the rest of the survey.

I am really suspicious now .... anyway, as a savvy money saver I place my business with several providers, each providing the best value for my money. Cannot see how I would want to lump my choices with FD for the sake of earning their "loyalty" points, or free banking as the case may be.

Detail_Merchant

I'll re-post here as well, seeing as I heard the rumour here first.

Basically first direct invited me to do an on-line customer survey.

Here is the main text about the new current account idea:

first direct are exploring the idea of a new current account which offers...

Loyalty reward
. Loyalty reward at the end of the year based on how much business you have with

first direct
. Pay-back reward for recommending family and friends

Tiered credit interest rates on your current account balance
. 0.50% AER on balances below £1,000
. 2.50% AER on balances £1,000 - £4,999
. 4.00% AER on balances over £5,000

Free text message banking
. Receive free statements and alerts direct to your mobile phone

Overdrafts and debit interest
. You would receive an automatic fee-free overdraft on £500
. The rate of interest on your overdraft will be 12.9% EAR
. There would be one overdraft arrangement fee of £15 to arrange an overdraft

increase above £500 or if your agreed overdraft limit was exceeded

Monthly banking fee
. You would pay a monthly fee of £10


And here is a bit more about the loyalty scheme, though no actual amounts, which makes it a bit vague:

Loyalty reward

"I would like to feel valued as an existing customer and acknowledge for my loyalty"

As a thank you for your business with first direct, you will receive a loyalty reward at the end of the year.

. The loyalty reward will be based on the amount of business you have with first direct.

. The more of your business you have with first direct, the higher the reward will be.

. You will also receive a reward for recommending your friends and family to first direct.

. You can choose to take your loyalty reward at any time during the year or save it up and take it as a lump sum.

MPH80

It's also a very low interest rate on up to £1000.

Ok - I might not earn much of a difference (e.g. a few pounds) by keeping my C/A with A&L - but I prefer to have the majority of my money in savings accounts than in my C/A so that I don't get too badly hit if I lose my C/A card. FD's choice means I have to keep a lot of money in my C/A to get a decent savings rate.

So if FD are going to do that then that's definately going to be a "think twice" moment for a lot of people.

I think, while I have said that the majority of the public will react with apathy over changes like this, that FD are making a risky decision. FD is a relatively new bank, it's customers, by definition will have switched from a traditional branch bank. I doubt many of them would have many problems changing again.

M.

mrcow

MPH80 wrote:

I think, while I have said that the majority of the public will react with apathy over changes like this, that FD are making a risky decision. FD is a relatively new bank, it's customers, by definition will have switched from a traditional branch bank. I doubt many of them would have many problems changing again.

Do you really reckon? Do most people really react with apathy to being charged £120 per year for nothing?

I know that many/most FD customers on this site will be jumping ship as soon as they get confirmation of all this (as to how worse off they'll be) and will be looking for the best deal for them.

Don't get me wrong, I have nothing against banks who bribe customers with special offers etc (it would be duplicitous of me to state that I did which is one of the reasons that I have a FD account in the first place), but this particular bribe doesn't seem to hold any positives.....it's "take out more business with us, or we're going to charge you" (and not even what I would say is reasonable amount, a £10 blanket charge per month irrespective of salary/banking use/personal circimstance is a lot of money to many people).