NI 'Big 4' Forced to scrap charges!!!

criminal_smile

Good news for all with a bank account with the 'BIG 4'. The Office of Fair Trading have concluded their investigation into banking charges here, and have decided that not only was there little difference between the charges applied by the banks, but also that they were guilty of being 'Price Leaders'. In effect, they would notify each other in advance of their charges, so that rates could be fixed at similar levels. Due to this fact, the OFT have now referred the case to the Competition Comiision. This means that all those nasty charges we get which don't apply in GB will now be stopped! As this has only just happened, I'm unsure of when the new rules will apply from.......but it has to be good news for all those with an account here!

press release available HERE

cruesfan

I agree this is good news. I am with the Northern and was about to move my account after 20+ years when they introduced the new current account plus, which is free of charges. Definitely a big improvement - free overdraft and no charges for setting up or changing direct debits and standing orders. I'm sure the other members of the 'big four' will soon follow the Northern.

SnowyOwl_2

Yes, definitely good news. However they will have to make their money somehow, so it'll still be worth keeping an eye on what else changes within their charging systems. There is more competition in NI than just those four so lets hope that this change doesn't stop people from looking at the whole market when considering what bank to use thus keeping them truly competitive.

declanmcc

Great news indeed. I've been lucky enough to have had my graduate account extended twice by First Trust Bank - so I've never felt the impact of any charges - but this has been too long in coming and thankfully it has. The "Big 4" have played on people's ignorance and got away with it - internet banking and the availability of previously unavailable banks (thanks to the internet) has opened Northern Ireland up to the rest of the UK - and left FT, B of I, Ulster Bank and Northern in a bit of a quandry!

wirm

Excellent.

D.A.

cruesfan wrote:

I agree this is good news. I am with the Northern and was about to move my account after 20+ years when they introduced the new current account plus, which is free of charges.

I can't remember exactly what it was, but I think I posted a thread here a while back about the Current Account Plus still not being half as good as most of the "mainland" banks' current account. If you do a search, you'll probably find it.

criminal_smile

Vaguely remember that D.A. Wasn't there also a mention of a monthly charge for this account whether you actually set up a DD or not?

iceliquid

I've been a long standing customer of Ulster Bank and BOI and have been totally happy.........no charges- because I manage my accounts well...and the occasion when I do go wrong my bank corrects it.....

If I could refer everyone to the following article in the Belfast Telegraph........and bear in mind how many A & Ls and Nationwide you see in the rural areas.....


Should we give banks a break?
The current clamour to condemn Northern Ireland's 'Big Four' banks over their handling of personal banking could be misplaced, according to University of Ulster economist MICHAEL SMYTH.
16 May 2005
As a representative of the economics profession I have become inured to jokes about economists and other disparaging comments about the 'dismal science'.
In fact I have become something of a collector of such vitriolic sideswipes.
Most recently I heard a new definition of the word 'waste' - a busload of economists plunging over a cliff with four or five empty seats.
Bankers get it equally tough. They are probably even more unpopular than economists, as evidenced in the observation that the difference between a banker and a sperm is that the sperm at least has the chance of becoming a human being.
It seems likely that the popularity of the banking profession in Ulster is about to hit the floor over the next few months as the Office of Fair Trading decides whether or not to instigate a referral to the Competition Commission of the 'Big Four' Northern Ireland banks' handling of personal banking.
On the face of it, the evidence looks stacked against the quartet of banks - Bank of Ireland, First Trust Bank, Northern Bank and Ulster Bank.
An investigation by Which? and the General Consumer Council for Northern Ireland found evidence of significantly higher personal banking charges, a lack of competition for customers switching accounts and relatively little price competition between them.
Furthermore, by issuing its report and undertaking further consultations, the OFT has signalled that it has not been persuaded by the explanations offered by the four banks. A referral to the Competition Commission looks the most likely outcome of these latest consultations.
There have already been calls from consumer bodies to the four banks for a pre-emptive scrapping of all transactions charges and for higher interest rates on personal accounts.
It remains to be seen what action, if any, will be taken by the OFT and, in turn, what the response of the banks will be.
Should personal banking customers be rejoicing at the prospect of costless banking and higher interest rates?
Will the outcome of the OFT inquiry be unambiguously good for banking customers and for Northern Ireland?
Closer examination of the wider operating environment of the banking network suggests that the structure of the industry reflects a number of rather unique dimensions of Northern Ireland society.
The take-up of online banking in Northern Ireland overall has been low compared to other parts of the UK.
Exhortations from consumer groups for banking customers to vote with their feet and switch to one of the smaller banks, or to go online, or to use telephone banking have so far gone largely unheeded. Why is this the case?
Are we in Northern Ireland so financially unsophisticated that we cannot shop around for a bargain?
Is it something to do with the fact that this is one of the least densely populated parts of the UK and that rural communities depend more heavily on a branch network? The average population catchment per bank branch in Northern Ireland is 3,000, compared with 5,000 in Great Britain.
Some of the smaller banks have relatively small branch networks. Indeed, some of the newer banks in Northern Ireland seem to have cherry-picked their branch locations in the more affluent conurbations. Few, if any, have ventured into deepest rural Ulster.
In this context, perhaps, we need to bear in mind the law of unintended consequences.
The law of unintended consequences, often cited but rarely defined, is that the actions of people and institutions always have effects that are unanticipated or unintended.
On one level an obvious consequence of a more draconian outcome of the current consumer investigation would be the abolition of the current bank charges regime.
On another level it seems likely that the four banks will seek to protect their shareholders' interests by cutting back on their cost base to offset the loss of income.
The burden of such cost reductions would probably fall on staff numbers and on the branch networks.
The Big Four currently employ 7,000 staff with an annual salary bill of more than £250m. A 10% or 20% reduction in staff numbers would take out a fair chunk of consumer spending in Northern Ireland.
Banks would also cut back on their supply chains. The four banks spend around £100m per annum on supply and ancillary services, much of which is met by local suppliers.
If the banks also start to close branches it seems likely that rural towns and communities will be affected most.
How would the loss of a banking presence affect the likes of Belleek or Fivemiletown?
How would a significant reduction in the number of rural bank branches sit with the Government's stated policy of creating a more inclusive society in Northern Ireland?
Would many of the public representatives who have been calling for the abolition of bank charges and higher interest rates then be campaigning against bank staff redundancies and rural bank branch closures? I wonder if a more face-to-face, personal banking service really matters to people in Northern Ireland.
And do consumers here make a connection between the availability of a fairly well distributed branch network, a personal banking service and the need for banks to cover the cost of them?
There is also the question of whether it is possible to measure the utility of the current personal banking service purely in monetary terms.
What price the ability of rural dwellers to transact their financial business in the local bank branch?
Is personal banking now just another commodity?
Is buying the personal financial product just like buying a suite of furniture?
If the answers to the last two questions are in the affirmative then Northern Ireland will soon have a low-cost banking service. Consequently there will be fewer bank branches, fewer personal banking staff and many routine transactions may well be 'offshored'.
Given that over 75% of customers currently pay no bank charges in Northern Ireland, and that customer satisfaction levels have recently been over 90%, it may be a high price to pay for lower-cost banking.



I'm happy with my Banks.......

Teerah

Personally think it is ridiculous to have to pay £4.50 every time I want to set up a direct debit and 6 quid to cancel one.

criminal_smile

iceliquid wrote:

I'm happy with my Banks.......

Ahh, a protected species these days.
Good on you if you're in a position to keep the books balanced IL, but unfortunately, the lack of serious investment in our little corner of the world helps to ensure that Joe Public in general is not lucky enough to say the same as you.
Whilst I agree with the sentiment of that article, I'm of the opinion that the banks here will go the way of all other banks anyway, and 'consolidate' their branches to the larger towns and cities. They are no longer a community service provider, but a corporate money maker, and in this profit driven society will succumb to the evil that is the annual balance sheet. Even the author has acknowledged this fact,

iceliquid wrote:

On another level it seems likely that the four banks will seek to protect their shareholders' interests by cutting back on their cost base to offset the loss of income.
The burden of such cost reductions would probably fall on staff numbers and on the branch networks.

The reality is that the banks here have had a free hand to rip us off. All this talk of us being 'financially unsophisticated' for failing to shop around is due to the crux of the author's argument.....that we are a 'community', and people here trusted the bank to look after their money through all the years of turmoil. But this has nothing to do with the fact that the banks here have been price fixing for years.
They are wrong. They have always been wrong, and now finally, it's going to be put right.

BigAl94

That was a well balanced and accurate article in BT iceliquid - thanks for posting. I can just imagine the public outcry when transactions are dealt with in "foreign" countries and towns like Donaghadee Kircubbin Portaferry Whitehead Cushendall Ballycastle Portrush Portstewart Kilkeel Newcastle Killinchy Killyleagh (and that was just a quick mental run around the coast!) loose their banks as has happened on "the mainland" Compared to rest of UK we have a first class Banking Service - you get what you pay for.