Vince Cable slams banks for "ripping off" customers
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Business Secretary Vince Cable (pictured) has hit out at banks claiming they are “ripping off” customers with high overdraft charges and continuing to pay “unacceptable” bonuses, according to the BBC.
Speaking on the BBC’s Panorama programme tonight, Cable will say that forcing banks to change their practices will be a key test of the coalition government.
Panorama found that high street banks are charging as much as 167 per cent interest on unauthorised overdrafts.
Authorised overdrafts are charged an average of 32 per cent interest, despite advertised rates of around 19 per cent.
Cable says customers are paying the price for a lack of healthy competition in a banking marketplace dominated by a few big players.
He says: “One of the negative side effects of this crisis is that our banking system that was already very concentrated is now even more concentrated so there is less competition, less choice and bigger temptation for banks to earn margins at the expense of their customers.”
Cable will also question the morality of banks that continue to pay large bonuses to staff.
He says: “I think the bonus culture which continues is unacceptable.
“The coalition agreement makes it very clear that unacceptable bonuses are continuing and that is something we want to try to stop and that reflects the lack of moral compass.”
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Readers' comments (10)
Anonymous | 19 Jul 2010 3:48 pm
Isn't an unauthorised overdraft theft? Try walking in to Tesco and just picking an item off the shelf and leaving without paying or authorisation! If you don't have any money in your account, and haven't asked for a facility to take money out, then you are spending someone elses money without their authority - I would imagine any interest rate is better than having your account frozen??
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Michael Fallas | 19 Jul 2010 3:54 pm
The Banks have been "ripping off" customers for decades what make Mr Cable think he can change things when they keep the FSA in place, who consistently failed to regulate the banks effectively and let them get away with it and still do?
Banks and Bank Managers are now now more than high pressure product sellers, sadly.
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John Whipple | 19 Jul 2010 3:59 pm
Tough talk for a politician.
I think he see the problems but does he have the power to push reform through ?
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Alan Townley | 19 Jul 2010 4:05 pm
well spoken, Mr Anonymous Banker ...here here!
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Andrew Harwood | 19 Jul 2010 4:06 pm
Unfortunately bleeting about bank behaviour is now common place and does nothing to redress the situation. The Government needs to control the bank's actions through legislation and not rely on retoric. If banks are allowed to pay high bonuses they will continue to do so. If the banks are allowed to charge excessive interest and get away with it, why should they stop because they are told it is unfair.
Politicians need to take action and forget the retoric
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Julian Stevens | 19 Jul 2010 4:11 pm
What about unacceptable bonus practices at the FSA and the fact that it [the FSA] routinely rips off the industry (massively) in return for doing a manifestly biased (coincidentally in favour of the banks) and incompetent job of regulating it?
"Lack of moral compass". Yes, there's certainly a dire shortage of moral compass at Canary Wharf, isn't there? £21m in bonuses for having done a crap job just about says it all.
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Robert | 19 Jul 2010 4:40 pm
Er, wait a minute! If an overdraft is unauthorised, why are the banks allowing it?
When I put my card in the slot, asking for money I don't have, why does it give it to me?
I don't go overdrawn, but do have an authorised overdraft facility, just in case. But why does a Bank allow the unauthorised overdraft? It couldn't be to...no...I'm imagining things.
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Crazy gang IFA member | 20 Jul 2010 10:01 am
The banks are not welfare offices. When I was a young whippersnapper and had no money and too many commitments (nothing changed there!!) the bank just choked the flow and told me (and helped me) to sort myself out.
Maybe rather than just charging high collection rates they should also use some of the money and direct it into client councilling. All they seem to do these days is out source all problems to a dodgy collection company who behave like gangsters. I was appalled at the way they treated my daughter over her graduate overdraft. I had to step in and talk to them. The overdraft was only about 400 pounds, you would have thought she had stolen the crown jewels!!
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bill wells | 20 Jul 2010 12:10 pm
If the banks are so rotten (which they are), why did the government bail them out without passing legislation to control their future behaviour. More to the point, if they are still as rotten as ever (which they are), why does the FSA carry on with a vendetta against IFAs which will end with Joe Public having no access to decent, honest advice. All that will be left for poor Joe will be the shoddy, over-priced products and dirty self-interested sales tactics of the banks.
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Martyn Trasler | 20 Jul 2010 8:28 pm
Nice to see Government owned RBS have just written out to say that they are to cease paying any credit interest on their range of current accounts and have increased interest rates for authorised and unauthorised overdrafts!
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