Examination of Witnesses (Questions 440
TUESDAY 30 JANUARY 2001
440. The Banking Code requires you to say. I
am reading from the Banking Code that you are signed up to.
(Mr Crosby) I believe we say three days. That is the
indication we give. At the end of the day, we are not directly
members of the clearing bank system; we are agents of the clearing
bank system. So we will be giving an industry-wide observation
on that, because we are subject to the clearing system that is
run by the clearers.
441. But you are signed up to the Banking Code?
(Mr Crosby) Yes, indeed. We will be giving clear guidance
to our customers in accordance with the Code.
442. What are the prospects for improving this?
(Mr Goodwin) Limited, I would say, on the basis that
there is still a movement of paper. I think it is generally accepted
across the industry that one of the big requirements would be
to get imaging of cheques to allow the physical appearance of
a cheque to be got to the centre to overcome the delays necessitated
by physically bringing paper to one point and then exchanging
that paper between the banks. If the cheques could be captured,
perhaps in the branch, on an electronic image and be transmitted
electronically to the central point at the right time, that could
speed the system up. That would require considerable investment
from quite a large number of players, not just the central clearing
banks but basically everyone who takes in cheques. It would be
my view, against the background of declining cheque volumes, and
the fact that for many customers it would be swings and roundabouts
as to whether they won or lost by speeding it up, because not
only does the money go into their account more quickly but their
own cheques go out of their account more quickly. It would not
be justified in terms of investment because cheque volumes are
diminishing and investment in a system which is diminishing and
which will be overtaken by alternatives I think is unlikely to
happen. Also, by international standards, it is not a bad clearing
cycle. It is far better than the US, for example.
443. Can I just check I have understood the
answers. Everyone seemed to agree on three daysin the case
of the Halifax they believe it is three daysbut is that
three working days or three days?
(Mr Head) That is three working days.
444. You did not actually say that the first
time. It is a small point, but since you are required to give
this information to customers, I think one was entitled to expect
a certain amount of clarity and crispness in terms of the information
you give to the Committee. According to the Banking Code, you
have to tell your customers about the charges you make for operating
their accounts, whatever they might be. Do you think customers
ought to be able to compare the charges on these various accounts
that the various banks and building societies offer?
(Mr Goodwin) Yes, where there is a comparison to be
drawn. Not all of the products are directly comparable. We are
content with the notion of transparency and customers comparing
445. Where would a customer access that information?
(Mr Goodwin) We publish a tariff of all our charges.
My understanding is it is also sent to customers, and any time
there are changes there is advance notification given of that.
446. The Banking Code requires you to tell customers
about the charges you impose. I am talking about market perspective.
How does a customer find out how those charges compare across
providers of equivalent products?
(Mr Goodwin) The customers can conduct the research
themselves by either getting the tariffs and comparing them or
looking across the various websites, for example. Money Facts
magazine springs to mind, where there is a comparison across all
the providers for a wide range of products. That is available
by subscription. It is not a book; it is a magazine. There are
other sources of comparison, various Consumers' Association surveys.
The newspapers are full of comparisons of savings rates and credit
card rates. I get daily press cuttings and it is almost impossible
to pick up a newspaper without seeing comparisons of prices.
447. I would very much appreciate seeing what
the quality of those kinds of information channels that you have
just referred to actually is, and how easy they are to access.
Perhaps you could send that. More importantly, do you not think
that in a properly functioning market the customer ought to have
the comparison of charges readily available to him or her?
(Mr Head) I think that is why the CAT standard is
important, because then you can put within the CAT standard those
sort of charges. There is a huge amount of small print on quite
a lot of bank accounts in terms of those charges, and customers
cannot compare. So the CAT standard in many ways gets round that
(Mr Goodwin) I am not sure there are many other markets
where there is something set up that actively makes the comparison
for customers in ways different to what we do. In the motor industry
you can buy almost any car magazine and it will have price tables
at the back of it. If you buy Money Facts magazine, it will take
you through all of the products in the personal financial market
and compare them.
448. Let us assume that the information is readily
available in Money Facts magazine in a way that is readily understandable.
I do not know that. You are going to let me know that, and I can
check it for myself. If it is so easy, why do you not put the
relevant pages of Money Facts magazine in your branches, or refer
your customers to them?
(Mr Goodwin) We would tend to short-cut that in the
sense that a lot of advertising takes place as far as price distinguishing
is concerned. At the moment, for example, the newspapers are full
of adverts about credit card interest rates, where the various
financial institutions compare various products. So I think we
do quite a long way to highlight to customers the prices of our
products. Not all the product features are to do with simply price.
Competition takes place on a number of other features.
(Mr Crosby) I agree with Mr Head. I think there is
so much complexity and range of product in the market place. If
you look at what entails giving customer information across the
whole market, I think using CAT standards that are well-aligned
with customer requirements gives a good benchmark, which is probably
more accessible to a large number of customers. When you look
at complex things like Money Facts books, first they do not cover
everything, and they are quite difficult to penetrate for most
customers. I would agree with Mr Head that CAT standards will
be very helpful in that sense.
449. Do you agree that Money Facts is too complex?
(Mr Goodwin) No. I think Money Facts is as straightforward
as it can be. The thing about CAT standards is there are a variety
of different products in the marketplace and there is a rich array
of different functionality in the marketplace. If you want to
come down to a very small number of products and give them all
a CAT mark, you can do that, and Money Facts will be a much simpler
publication. One of the reasons that Money Facts is so complicated
is that they compare products. To go back to what we said earlier,
comparing the NatWest Plus account with the IF account or the
Halifax current account, there would be a few asterisks around
the terms and conditions. That is what makes Money Facts as voluminous
as it is. The tables are quite straightforward; there is then
a large amount of text explaining all the terms and conditions
of the various products. To enable you to make a judgment, you
need to understand the different interaction of the different
terms and conditions. I will happily send you a copy of Money
Chairman: Thank you very much for coming
and answering our questions.