First direct chaos

colsten

EachPenny wrote: »

I'm not entirely convinced the idea a bank can reject applications for no apparent reason (but using hidden criteria) would stand up to challenge.

Thankfully UK businesses cannot be forced to do business with everybody - just in the same way as UK consumers cannot be forced to do business with a business.

meer53

Accepting one, rejecting one, and 'maybeing' one in three near-identical circumstance is exactly the kind of thing that creates the conditions for challenge.

What basis would you challenge on then ? I'd be interested to know.

EachPenny

colsten wrote: »

Thankfully UK businesses cannot be forced to do business with everybody - just in the same way as UK consumers cannot be forced to do business with a business.

I agree with the second point, but the first is at odds with at least two UK Court cases. See:-
Lee v Ashers Baking Company
Bull and Bull v Hall and Preddy

Both relate to the provision of a service, which was denied to prospective customers because the sexuality of the customers was an issue for the service providers due to religious beliefs.

Sexuality and religion were at the core of both cases, but they appear to set a precedent - if you offer a service to the public in a business capacity you do not have an absolute right to pick and choose your customers.

On the face of it, running a guest house or baking cakes is very different to offering banking services. But sooner or later (if they haven't already) someone will challenge the refusal of a bank to provide banking facilities on grounds which are or appear to be discriminatory.

The ban on gender-based insurance pricing is another example where the prevention of discrimination has partially trumped business decisions.

Banks cannot refuse to open accounts for men as a group, they cannot refuse women, LGBT people, black or asian people, Jewish or Muslim people, disabled people, people over 40 etc. So what grounds would they have to refuse someone just because they were a student, or unemployed, or retired?

KJSmith

EachPenny wrote: »

So what grounds would they have to refuse someone just because they were a student, or unemployed, or retired?

The difference is that none of these are protected characteristics under the Equality Act.

Kernel_Sanders

Terry98 wrote: »

These are the conditions....
'To get the £100 switching bonus, you need to use First Direct's switching service to fully switch and close your existing account and pay in at least £1,000 within three months of your account opening.

Does that 3 month deadline just refer to the paying in of the £1000, or do you also have to switch in that period? If the latter, is there any point in keeping an account opened over 3 months ago?

EachPenny

KJSmith wrote: »

The difference is that none of these are protected characteristics under the Equality Act.

Fair point, and maybe I'm flogging a dead horse, but the point that banks do not have the absolute right to pick and choose customers stands doesn't it?

Even if the 'rights' of a bank are only limited by the Equalities Act 2010 to cases where the prospective customer is someone with one or more of the protected characteristics, there may be other potential routes a challenge in some form could take.

Parts of the FCA handbook I've looked into in the past seem to emphasise the need for 'fairness', particularly in relation to communication with customers. I won't put that forward as a definite argument here because I don't have a full understanding of inner-workings of the handbook, I've only dipped into it as part of a complaint against a bank on a completely different subject.

The only thing I can add is my experience when HSBC turned me down online for the Advance account because my income was below £1000 per month. The attitude of the branch manager changed very abruptly and positively the moment I mentioned the word 'Ombudsman'. A phone call was made and a special appointment fixed up so I could open an account in-branch. Maybe they took pity on me, but I suspect more likely they were aware that their approach might not stand up to too much external scrutiny.

eskbanker

The banks will be using automated algorithms to assess applications, with information supplied by credit rating agencies being supplemented by other data and scored against business rules. In the event of any challenge from regulators or courts they'd be able to demonstrate enough fairness to avoid any problems with alleged discrimination, but naturally they'll argue (successfully) that they shouldn't be obliged to publicise these internal scoring mechanisms to consumers, for reasons of fraud prevention and/or commercial confidentiality.

Of course this lack of transparency leads to the sort of frustration and suspicion evident in this thread, but conversely don't be under any illusion that threatening banks with the ombudsman will typically make them capitulate, there have been many other posters who have hit a brick wall when demanding reasons for rejection!

I know your earlier example of rejecting applicants called 'Smith' was deliberately extreme, but if a bank had to demonstrate its process to a competent authority and that sort of rule was in place, clearly they wouldn't have a leg to stand on....

JuicyJesus

EachPenny wrote: »

I'm not entirely convinced the idea a bank can reject applications for no apparent reason (but using hidden criteria) would stand up to challenge.

It does and it has done. Repeatedly.

EachPenny

eskbanker wrote: »

I know your earlier example of rejecting applicants called 'Smith' was deliberately extreme, but if a bank had to demonstrate its process to a competent authority and that sort of rule was in place, clearly they wouldn't have a leg to stand on....

Thanks Eskbanker, I'm 98% convinced by the arguments being put forward, especially in relation to the Ombudsman service actually being of any use if you got to the point of making a complaint - the value of the 'O' word is the commercial decision the banks then make comparing the time cost of dealing with an Ombudsman complaint (which they know they are going to win) versus compensating the customer and/or simply providing the service.

The OP seems to be long gone and all I wanted to do was gently challenge the notion put forward by some posters that banks have an absolute right to pick and choose their customers. A scoring algorithm which uses justifiable criteria to identify suitable customers is fine, but the situation is not so clear cut if that algorithm produces results which (perhaps intentionally) are inconsistent with the published terms and conditions for an account offer, or the advertising the bank uses.

The 'Smith' example was to make a point, but what if you replace 'Smith' with 'In employment', given that not being in employment covers a wide range of people including people taking time away from work to care for children or sick or elderly relatives, people unable to work through long-term illness or disability, or for that matter several forum members who I'd guess have substantial (legitimate!) monthly income but would/could not describe themselves as employed. All of these people could have excellent credit histories and substantial monthly income. To refuse to open a preferential account for someone, lets say a woman who has taken a career break to have children, means getting ever so close to the boundaries of discrimination - and all that can potentially entail if someone with enough resources takes sufficient offence.

Maybe the final point I'd want to make is the HSBC/First policy appears to be slightly different to the approach adopted by the other banks offering preferential current accounts with T&C's. Lloyds, Santander, TSB, Nationwide, BoS all have accounts which pay good rates of interest if you pay in a certain amount a month. I've not heard of many people being rejected for these accounts because their monthly income is below the minimum pay-in. I'm just curious how/why HSBC/First seem to take a different approach.

eskbanker

EachPenny wrote: »

A scoring algorithm which uses justifiable criteria to identify suitable customers is fine, but the situation is not so clear cut if that algorithm produces results which (perhaps intentionally) are inconsistent with the published terms and conditions for an account offer, or the advertising the bank uses.

The results aren't inconsistent with published criteria because the published criteria are necessary but not sufficient. In other words, when a bank say that one of their conditions is that you need to pay in £x per month to be eligible, they're saying if you don't do so then you'd be wasting your time, not that if you do then you'll definitely get the account.

EachPenny wrote: »

The 'Smith' example was to make a point, but what if you replace 'Smith' with 'In employment', given that not being in employment covers a wide range of people including people taking time away from work to care for children or sick or elderly relatives, people unable to work through long-term illness or disability, or for that matter several forum members who I'd guess have substantial (legitimate!) monthly income but would/could not describe themselves as employed. All of these people could have excellent credit histories and substantial monthly income. To refuse to open a preferential account for someone, lets say a woman who has taken a career break to have children, means getting ever so close to the boundaries of discrimination - and all that can potentially entail if someone with enough resources takes sufficient offence.

But that's the whole point - it's quite legitimate for them to have a business rule that says they'll only offer accounts to those in formal employment. The fact that this might exclude some people who might see themselves as better prospects than others, for the reasons you mention, is irrelevant if those people aren't specifically being discriminated against. In other words, the career-break woman you mention isn't being refused access because she's a woman on a career break (which I agree would be a questionable reason) but because she isn't in employment.

EachPenny wrote: »

Maybe the final point I'd want to make is the HSBC/First policy appears to be slightly different to the approach adopted by the other banks offering preferential current accounts with T&C's. Lloyds, Santander, TSB, Nationwide, BoS all have accounts which pay good rates of interest if you pay in a certain amount a month. I've not heard of many people being rejected for these accounts because their monthly income is below the minimum pay-in. I'm just curious how/why HSBC/First seem to take a different approach.

I agree with your perception but it is all anecdotal and probably just comes down to their customer profiling and the stringency of their own business rules, which may be an overreaction to the hefty fines they received for insufficient checks on customers.