Examination of Witnesses (Questions 320
TUESDAY 30 JANUARY 2001
320. So there has not been proper competition
in UK banking.
(Mr Crosby) I think competition is intensifying all
the time. If I may go back to the point I made, the issue is the
sense customers have of inertia, how difficult it is to move,
and, in so many products, that is what finally breaks down any
barriers to competition and that is why I would focus on the new
automated transfer system which I think will make that change.
321. Mr Goodwin, what do you pay on your standard
NatWest Current Plus account in terms of gross interest?
(Mr Goodwin) I believe that would be 0.1 per cent.
322. What does the Halifax Bank pay gross?
(Mr Goodwin) I have no idea. There is an advertising
campaign at the moment
323. You have no idea?
(Mr Goodwin) It depends which accounts we are comparing.
Halifax are offering a rate higher than that for an account with
324. What is the highest that you are aware
(Mr Goodwin) If I could finish, they are offering
it on an account with particular conditions surrounding the operation
of the account. Mr Crosby is obviously far better placed than
I am to go through the ins and outs of the terms and conditions
of his account but it is not universally available to everyone.
There are requirements about minimum monthly transaction flows.
I do not know that a comparison of what we would offer on the
Current Plus account, which is what you asked me about, with that
would necessarily be the relevant comparison. Looking at how customers
operate their accounts, there are savings accounts available to
customers, there are sweeps available to automatically take balances
out of customer accounts and
325. I understand that. What is the nearest
comparable Halifax bank current account to Current Plus?
(Mr Goodwin) I personally do not know.
326. You do not know?
(Mr Goodwin) No because I am not directly responsible
for setting the detailed prices.
327. No, but you should know what the competition
(Mr Goodwin) I do know what the competition is doing
in the sense that we are out in the marketplace
328. You are obviously not aware of what the
competition is doing because you cannot compare like with like.
(Mr Goodwin) I think the fact that I do not know every
single product pricing in the Halifax's product range is correct,
but that does not necessarily indicate that I do not know what
the market is doing.
329. Let us try again. Do you think there is
any comparable current account offered by Intelligent Finance?
(Mr Goodwin) It would not be comparable because it
is a direct only offering. Our current accounts are operated through
a branch network, so I would not compare our pricing on the Current
Plus account that you mentioned with Intelligent Finance.
330. So you do not think the rate of interest
paid by Intelligent finance is comparable to any product you offer
because of the differences in branch network?
(Mr Goodwin) It would be comparable to some of the
products that we offer. We have Internet only offerings also but
again I am not familiar with the detailed pricing of it. The point
I am making to you is that our Current Plus account, which is
what you mentioned in NatWest, is not comparable with it.
331. I think anyone listening to this will find
your answers deeply unsatisfactory because you are not coughing
to the fact that, on current accounts, Intelligent Finance, as
a for instance, or someone at Smile can actually get over 40 times
more interest paid to them on their current account than you offer
at 0.1 per cent gross.
(Mr Goodwin) I do not accept that as a valid comparison
for the reasons that I have outlined to you. If you would like
a comparison of the rates of all the products that we offer versus
the rates of those that other businesses offer together with the
terms and conditions
332. You are inviting us to believe that there
is no comparison between the amount of interest paid by the new
entrants and your own bank and NatWest.
(Mr Goodwin) What I am saying to you, if you would
allow me to answer the question, is that there is a comparison
333. If you are ever going to answer it.
(Mr Goodwin) I do feel it is important that I get
the opportunity to answer the question properly.
334. Let us move on.
(Mr Goodwin) The question which you asked has an element
of content product delivery channel which needs to be taken into
account in the comparison.
335. Like the jargon! Let us move on.
(Mr Goodwin) If you want to compare different accounts,
then we can compare
336. Shall we move on because this jargon is
not getting anywhere. You are not prepared to accept this comparison.
(Mr Goodwin) This is not jargon.
337. Let us move on, Mr Goodwin.
(Mr Goodwin) I do feel it is important that I get
the opportunity to answer the question.
338. He must be allowed to answer the question.
(Mr Goodwin) This is not jargon. This is a very important
issue as to what can be compared with what in a competitive marketplace
and it is also the essence of a competitive marketplace that not
all of the players need offer the same pricing. There are different
customer propositions out there which have different prices and
we are quite content. We are growing our business and we are growing
our business in a marketplace and in an environment where there
is competition and transparency around what is offered. Thirty
per cent of our personal current account customers elect to pay
for their current account; they pay to have a current account
because they prefer the proposition. I think it is important that
customers are given that choice, not simply led into overly simplistic
comparisons between one type of account and in any other way on
another type of account.
339. It is banal of you to say that you offer
different products from other competitors, of course you do and
you made that point really rather well. However, you are not prepared
to say to this Committee because you do not know what the nearest
equivalent to your Current Plus account is, what you would get
if you had a similar account with one of the new entrants.
(Mr Goodwin) I am happy to find out for you, if you
would like that.