Memorandum submitted by HSBC Bank Plc
At the hearing of 14 May, which I attended along
with Chief Executives from other high street banks, I was asked
how HSBC fostered the sale of its basic account. In the course
of questioning we were all then asked to write to the members
of the Committee to explain our policies in this regard.
As with many other product lines the extent
to which "promotion" takes place will depend upon many
factors, the only common one being that similar products on offer
from different banks will be promoted in different ways. For instance
my colleagues at the hearing have all expressed already that their
basic accounts are promoted in a variety of ways, from partnerships
with community groups to Credit Unions.
HSBC does not choose to advertise its "Basic
Bank Account" specifically and it is true that neither do
we have any partnership arrangements with external groups. In
this the basic account is not unique. Our philosophy, which extends
across the majority of our product range, is that we first seek
information to discover a customer's needs, then, and only then,
do we attempt to find an appropriate product to fulfil those needs.
Within HSBC we have a range of Current Accounts
and within our branches we display a brochure giving details of
them including the basic account. When a prospective new customer
approaches us to open a bank account we make no pre-judgements.
We seek the normal range of information and this would include
provision of satisfactory identification and documents to verify
an address. An assessment of all the information is then made
to discern what product may best suit the customer. Each product
has a range of features, some of which include the eligibility
to obtain credit either in the form of an overdraft or via a credit
card. Our basic account has no "credit" features and
if no other account is suitable then a basic account will be offered
and its features explained. We believe that this is the most open
method of providing a current account to suit the individual circumstances
and needs of a potential new customer.
I would also like to comment on the recent survey
from the Financial Services Consumer Panel referred to in the
hearing since this was a catalyst for questioning. The survey
used only a very small sample of 16 "mystery shoppers".
12 of those 16 obtained a bank account with more functionality
than a basic account and have professed themselves happy with
it. However, on the basis of this evidence the survey chose to
criticise the banks for not offering basic accounts to those "mystery
shoppers" as a first (and only) option. I have to say I find
this extraordinary unless the survey has formed the view, for
whatever reason, that lower income groups are simply not able
to manage their financial affairs and have, at all times, to be
protected with a "no overdraft" account.
In closing, I would say that since our own Basic
Bank Account was launched towards the end of 2000, HSBC has opened
around 50,000 accounts. The British Bankers Association will confirm
that more basic accounts were opened by the industry in 2001 than
in any previous year. In addition, HSBC, along with its fellow
participants in Universal Banking Services, will make its basic
account available to those benefit claimants who need a bank account
when benefits are automated next year.
22 May 2002