Examination of Witnesses (Questions 200
TUESDAY 14 MAY 2002
200. It is an off-balance-sheet tax which your
shareholders and customers are picking up. Is that how you would
(Mr Barrett) Yes, that is how I regard it.
201. That is how you regard the basic bank account.
(Mr Dalton) No, I did not say that.
(Mr Barrett) No. I think the basic bank account is
a laudable objective. It is in our self-interest to have as much
financial inclusion as possible because it increases the financial
dynamism of the economy. It is a very worthwhile effort, the consciousness
over the years worldwide of people excluded from the mainstream
of economic activity has had its profile raised time and time
again and it is right for us to participate in that and it is
in our self-interest that the system be as inclusive as possible,
because we will make more money from it as a result.
202. For the last five minutes you have been
agreeing with Andrew there who has been luring you into this unfair
attack on a Labour Government and another stealth tax. You have
been lured into how unfortunate you are to have to take these
at the Government's insistence. You have to make up your minds.
(Mr Dalton) No.
(Mr Goodwin) No.
(Mr Ellwood) No.
(Mr Dalton) We are talking about two different topics
here. We are talking about one topic being the mechanisation of
(Mr Ellwood) There is a distinction between the Universal
Bank account and the basic bank account which is very significant.
203. I shall have to read the verbatim report
very closely then.
(Mr Ellwood) The Universal Bank account was where
we agreed to put in money to support these Post Office accounts.
We do not control, we do not manage them. The big difference is
that the basic bank account is within our control. That is a fundamental
difference of inclusion and paying in effect tens of millions
of pounds to the Government to support the Universal Bank.
204. One of you mentioned these could possibly
cost you millions of pounds.
(Mr Ellwood) We believe they could at the moment.
205. I must cost my bank millions of pounds.
As I understand it you do not allocate a personal charge, that
was the point you were making. What you really depend on is me
taking out the credit card, the mortgage, a loan, an ancillary
product and also keeping over £1,000 in the bank account.
As I do not do any of those things and have not for 30 years,
I presume I am even worse than the basic bank account holder who
does not cost you anything really if he keeps £1,000 in the
(Mr Goodwin) This is where we get into the philosophy
again. We take the view that given that the branches are there
anyway, it is better to have someone as a customer so that at
least we have a chance of cross-selling to them as we go through
the cycle, as opposed to not having them as a customer, in which
case we do not have that chance.
206. Barclays has 140,000, Lloyds has 100,000.
How about the other two banks?
(Mr Goodwin) We have opened up just under 200,000
of the specific accounts of this type. We have many people who
would fall into this category who have ordinary accounts with
us which have built up over the years. I do not have that figure.
207. You have 200,000. Barclays have already
shown their hand, what about yourself?
(Mr Dalton) We have 50,000.
208. That sounds very low compared with 200,000,
(Mr Dalton) Our account base is quite a bit smaller.
209. The Consumer Association found it very
difficult in their surveys, in their mystery visits, to find any
literature or publicity about these. Do you think you advertise
them enough? You certainly do not, by the sound of it. Do you
take any initiatives to get them across to the type of individuals
you will not usually find coming through your door?
(Mr Barrett) Yes, we do.
(Mr Ellwood) One of the things we do is to market
the target market, which is basically people who belong to community
credit unions. There are 500 community credit unions, so we have
written to those.
(Mr Barrett) And housing associations.
(Mr Ellwood) There is literature in our branches as
well. Fundamentally we think the people to whom these accounts
would appeal would be people who in the main are members of community
(Mr Dalton) The survey which I think you are referring
to was of 16 people.
210. You have a thing about surveys.
(Mr Dalton) Particularly when they are this small.
Some other good ones have been done by various other people which
show the satisfaction level is very high and I should be very
happy to show you those too. That particular survey had 16 people
in it and of the 16 people, 12 actually got other kinds of bank
accounts versus basic bank accounts. I do not think that is bad.
I think that is good.
211. What are you doing? You have evaded the
question. A very good initiative with credit unions, a not so
good initiative with building societies. What are you doing to
get them in, to attract these customers?
(Mr Dalton) We like to provide our customers with
the bank account which suits them. If someone was sitting down
in front of one of our people and said they wanted to open a bank
account, then we would open the best account for them. If that
were a basic bank account, then we should be very happy to do
so. I do not think it is right for us to say you should have a
basic bank account. It is right for us to ask what account is
good for you. If it is this one, it is this one; if it is that
one, it is that one. If it is the basic one, it is the basic one.
What we are doing about basic bank accounts is that we are providing
basic bank accounts to people when that is the most important
account for them.
212. Take one of my less well-off estates in
East Leeds. How would they know about your basic bank account;
that is the point? Nothing takes them into your bank because they
do not see that as a place for them. The credit union is the one
initiative I have heard from the four of you where you take it
to their doorstep. What do you do to get out of your bank? Leeds
has the worst record.
(Mr Dalton) "Worst" is a relative term.
213. Numerically worst.
(Mr Dalton) I am sorry. I have forgotten your question.
214. What initiative do you take to get to a
person on a less well-off estate, no bank account, programmed
to go to a loan shark in the absence of a credit union, paying
a lot of interest, under the threat of violence. What do you do
to say they should not be doing this because a basic bank account
is available from your institution?
(Mr Dalton) We do not send direct mail into the particular
estate you are talking about and that sort of thing, but we do
try to get ourselves involved in many, many community activities.
I am not sure about Leeds, but in Sheffield, for example, we certainly
have an education action zone where we are involved, where we
do things like you suggested and make sure people know.
215. With respect, I am just asking you. Barclays
have filled their submission with very good initiatives in a social
way, but I am asking about basic bank accounts. How would I find
out about your basic bank account? Are you going to send me letters?
Do you advertise in the papers? Do you advertise in the local
community centres, the libraries? Do you do anything to seek to
(Mr Dalton) We do things to make people aware of basic
bank accounts. We do not run television commercials
216. What do you do then?
(Mr Dalton) Let me give you an example with Sheffield.
We have community centres, we have areas where we are helping
communities to develop, we put ads there, we talk to people.
217. No, no. That is a one-off initiative in
Sheffield and there are community centres all over but they do
not make the immediate leap to a basic bank account. I am just
asking you what initiative, what adverts; you do not direct mail,
you do not put adverts in the papers. I do not mind if you say
you have no specific initiatives; that would be more straightforward.
We are all trying and despite being lured by Andrew you are apparently
nailed to the principle of trying to get these basic bank accounts
(Mr Goodwin) As far as promoting these accounts is
concerned, we advertised on national television when they were
launched in NatWest. We work with the Employment Service to make
sure these accounts are made available particularly to New Deal
participants because they lack many of the attributes necessary
to open a bank account. Indeed some of the biggest issues for
people in this category are not so much about the bank not being
willing, but about them not possessing some of the identification
documents needed to open an account. That proved to be quite a
big issue where we were able to strike up an arrangement with
the Employment Service, where they would identify the individual,
which got round some of the shortcomings they had in the first
218. Could the four of you supply the Committee
with specific initiatives that you are taking which relate to
the take-up of the basic bank account?
(Mr Dalton) Yes.
(Mr Goodwin) Yes.
(Mr Ellwood) Yes.
(Mr Barrett) Yes.
219. The second thing is that we all see the
long-term aim as moving people from basic bank accounts to a full
borrowing account. Do you undertake any initiatives relating to
your present basic bank accounts to tease your customers forward,
with one eye of course to not putting them in debt.
(Mr Goodwin) There is a fundamental point in here
which contrasts with the Universal Bank. One of the means by which
individuals can obtain credit is through credit scoring. There
are basically two types of credit scoring: one is an attribute
scoring based on where you live and what you do. There is also
behavioural scoring. All of the basic bank account products incorporate
behavioural scoring. It enables an individual, by conducting their
basic bank account in a proper and structured way, to start building
up a credit score, which then enables them to obtain credit at
a later stage. I know they will not be able to do that with the
Universal Bank account.