- 04
- Nov
The government should take the opportunity to ensure that consumers are put at the heart of UK banks business model, Which? has insisted.
An announcement from the group came as it launched a major new campaign to reform the UK financial services industry. Research carried out by the firm has found that for many Britons, there is little faith that the current organisational structure of the banking industry can prevent another downturn from occurring. When questioned, more than four-fifths (81 per cent) of the 1,001 adults questioned by the group said that they thought reform is necessary to avoid the recent financial turmoil from resurging in the future.
Indeed, more than two-thirds (67 per cent) of respondents said that they blame the banks directly for the current economic contraction and the dwindling availability of credit and loans. Meanwhile, 73 per cent of people said that they had personally been exposed to banks and other loan providers offering money in an irresponsible manner.
Following the survey, Which? embarked on a new campaign urging the government to do more to ensure that consumers are protected from unsound lending practices and other similar problems. In a letter to chancellor of the Exchequer Alistair Darling, the group demanded that banks are required to do more to insulate their customers from recent corporate failures. Among the requests made by the watchdog was that all of the UK institutions which have received public funding as part of the recent bailout should be required to pass on cuts to the base rate of interest immediately. Such action could relieve strain on consumers by increasing the availability of cheap mortgages, personal loans and credit cards.
So too, the group also insisted that there should be an internal review into retail banking practices to make sure that the interests of UK customers are integral to the operations of all financial institutions.
Which? chief executive Peter Vicary-Smith commented: “Banks have had their bailout - now its time for them to deal sympathetically and fairly with the plight of ordinary consumers, many of whom are anxious about their savings or struggling with their mortgage. It is the governments duty, as a major shareholder, to ensure this happens. The government cannot afford to pass up this unique opportunity to make long-term, consumer-focused changes to the banking industry and in the short-term were after a fairer deal for consumers. We want to see an independent review leading to an overhaul of an industry that is characterised by weak competition [and] irresponsible behaviour.”
He said that many banks have a poor track record of making sure that customer services and support standards are up to scratch.
The announcement from Which? follows a raft of measures designed to add buoyancy to the banking industry. This was matched by a cut in the base rate of interest enacted by the Bank of Englands monetary policy committee, which slashed rates by 50 basis points last month. Such a move may soon be followed by a fall in mortgage and personal loan interest rates.
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