Do you trust banks? Blog Discussion

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This is the discussion to link on the back of Martin's 'After preaching “don’t trust your bank” for years, it's depressing people started at the wrong moment!' blog. Please read the blog first, and then click reply to discuss.
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  • krisskross
    krisskross Posts: 7,677 Forumite
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    I do not trust my bank to give me independent financial advice, I know they will be plugging their own products. However I certainly do trust them to look after my money, increase my savings a wee bit and give it back when I want it.

    Where is the money going that has been withdrawn from Northern Rock? Will people trust any of the banks or will it be under the mattress?
  • Karmacat
    Karmacat Posts: 39,460 Forumite
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    I was in the Northern Rock queue for 4.5 hours last Saturday - but I'd given notice a month ago that I wanted to take the money out, for my builders. I was the youngest person in the queue (and I'm in my early 50s!!!).

    I know why I think those pensioners and soon-to-be pensioners were taking their money out. Because they've seen company pensions that they were told were safe absolutely disappear, they've seen the Equitable Life fiasco, they saw Barings collapse, and they've just heard recently that Gordon Brown was the one behind taxing dividends held in pension funds.

    People were very well aware that the more of them took their money out, the more problematic Northern Rock's situation would be, but all of them said, I've got x amount in, I can't afford to lose 10% of that. The *only* thing that would have helped is the scenario that Martin suggested in his blog.
    2023: the year I get to buy a car
  • Dakota_2
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    If Martin doesn't understand why the public doesn't trust the announcement made immediately the Northern Rock problem was disclosed I'll explain.

    People remember previous financial institution fiascos where the general public lost money:

    1. The Equitable life fiasco.
    2 Baring Asset Management collapse.
    3 The collapse of the Bank of Commerce International.

    The attitude of the banks towards their customers has been appalling.
    The compensation scheme as originally announced was a joke.
    You only get 100% the first £2000 and 90% of the rest up to £30000!
    So even if you don't have more money than the upper limit you are losing 10% of your hard earned money, I'm not surprised people were queuing up to get their money out!
  • Shytalker
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    Do we trust them?

    Well, I feel sorry for the bank workers. They are expected to sell their 'products' at every opportunity and have targets to meet. I don't think that they would give the best advice for me.

    I trust the banks to look after my money but I had a bad time with the Halifax. One of their employees altered the cheque that I sent to pay off my mortgage and paid it into a private account.

    It was sorted out in the end but showed what a wide range of competences they had. From 'everything is OK' and 'ignore any demands for missed payments' to the help given at local (Huddersfield) branch level and their efficient fraud office. Even then, their fraud office phrased their letters as though I might be to blame - "the disputed use of your cheque book", etc.
    No apology, no compensation for my worry and phone calls.

    Also, customer choice is becoming limited. I don't trust the internet for banking but I think that I will eventually be pushed into using it. Not yet, though.
  • nearlyrich
    nearlyrich Posts: 13,698 Forumite
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    I trust my bank, they call me up to do a financial review (aka a sales pitch for all their products) and end the call agreeing I have it all under control.

    I think you have to take responsibility for checking everythig and not blindly trust that their product is the best. I know people paying over the odds for mortgage interest because thay are getting a discount but they can't understand that they are getting a small discount off a stupidly high rate.
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  • VickyA_2
    VickyA_2 Posts: 4,533 Forumite
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    I hang my head in shame at being one who responded to a sales call about popping into my local branch of the Halifax for a savings MOT....... Yes, it was my call, and I like to *think* that I'm quite savvy with my cash but if I was a slightly weaker person then I'd have been completely sucked in by the sales pitch.
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  • Tim_L
    Tim_L Posts: 3,816 Forumite
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    Dakota wrote: »
    If Martin doesn't understand why the public doesn't trust the announcement made immediately the Northern Rock problem was disclosed I'll explain.

    People remember previous financial institution fiascos where the general public lost money:

    1. The Equitable life fiasco.
    2 Baring Asset Management collapse.
    3 The collapse of the Bank of Commerce International.

    The attitude of the banks towards their customers has been appalling.
    The compensation scheme as originally announced was a joke.
    You only get 100% the first £2000 and 90% of the rest up to £30000!
    So even if you don't have more money than the upper limit you are losing 10% of your hard earned money, I'm not surprised people were queuing up to get their money out!

    These examples are not the same thing. Barings and BCCI were brought down essentially by fraud. Equitable life's problems were due to an irresponsible attitude to possible returns, and by guaranteeing annuity rates. Equitable and Barings were essentially investment companies and investments carry risk. It's doubtful that anyone in the Northern Rock queues had any losses from these companies anyway, more likely that they had been fed the names by those stoking panic to make a good story.

    Every analysis showed that Northern Rock was completely solvent. There was no prospect of the 10% deduction and cap being applied. The fact of the matter is that anyone having massive savings in an account there was losing anyway by not having a leading rate.

    This is the point of the article, I thought. There are things you can trust the banking industry on. If I had money in the NR it would have stayed there.
  • jakeshaw
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    Tim_L wrote: »
    These examples are not the same thing. Barings and BCCI were brought down essentially by fraud. Equitable life's problems were due to an irresponsible attitude to possible returns, and by guaranteeing annuity rates. Equitable and Barings were essentially investment companies and investments carry risk. It's doubtful that anyone in the Northern Rock queues had any losses from these companies anyway, more likely that they had been fed the names by those stoking panic to make a good story.

    Every analysis showed that Northern Rock was completely solvent. There was no prospect of the 10% deduction and cap being applied. The fact of the matter is that anyone having massive savings in an account there was losing anyway by not having a leading rate.

    This is the point of the article, I thought. There are things you can trust the banking industry on. If I had money in the NR it would have stayed there.

    I agree. I think it is fundamental that the British public dont let the media ensued panic take down a major financial instution, and in turn the stability of the financial system we all take for granted.

    Indeed, the website https://www.backnorthernrock.com delves a little into what has and can be done for the ailed bank. They currently pay 6.31% for online accounts - so its a safe bet, ESPECIALLY under £2,000! Ive opened and deposited.
  • Tetsuko
    Tetsuko Posts: 528 Forumite
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    Trust and banks in the same sentence :rotfl:
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    "I disapprove of what you say, but I will defend to the death your right to say it" Voltaire :cool:
  • carol99_2
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    I listened to Radio 2 when it was all 'cracking off' and people in the queue at a Northern Rock branch were asked why they were there. Almost without exception the answer was along the lines of 'because everyone else was doing it'. In general, I think that we are an enlightened bunch in this country but this flock mentality 'does my head in'. If some of them had quoted some of the previous financial scandals I would have at least believed that some logical thought process was in there somewhere. I just think the Brits like standing in queues.
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