'Greedy' big four banks savaged

THE big four High Street banks have been savaged for their greed and refusal to clean up their act - at the same time as it is revealed that customers are deserting them in droves.

A blistering report from the Commons Treasury committee says Lloyds TSB, Barclays, NatWest and HSBC are mounting a deliberate go-slow over long-urged reforms, ranging from more honesty on interest charges to speeding up the clearance of cheques. And it says they should no longer be allowed to 'profit from procrastination'.

The catalogue of failures and misdemeanours pinpointed by the cross-party committee includes:

A lack of any 'clear progress' in cutting the overall clearing time for cheques.

Sewing up small business bank accounts with so little competition that the big four are operating an effective 'monopoly'.

Failing to meet their own targets to allow customers who wish to switch bank accounts to do so free of red tape in reasonable time.

Snaring school-age children by 'educational visits' from bank representatives - coupled with the offer to open an account.

Failing to provide effective 'basic accounts' for poorer customers.

Failure to co-operate in providing at least one branch in villages and other areas without a banking service.

The report will increase the pressure on Chancellor Gordon Brown and Trade and Industry Secretary Patricia Hewitt to act. But at the same time there was fresh evidence today that unhappy and outraged customers are voting with their feet.

Figures from the Consumers' Association suggest that within five years 4.5 million account-holders with the big four will have switched loyalties to up and coming rivals headed by internet banks and building societies.

The Consumers' Association says that 3.5% of current account holders at the big four are set to switch in the coming year, almost three times the number who changed accounts in 1999.

The stampede, says the CA, is the logical response to sky-high charges, derisory interest rates on current accounts and appalling service. The high street giants have until now denied losing market share. Lloyds TSB claimed last week that it had a 'healthy net growth' in current accounts.

Abbey National, however, has claimed that the number transferring from the big four has jumped 137% in the past 12 months, with most of the new business coming from customers with higher balances.

Today's committee report homes-in on the fact that the banks were told more than two years ago that they must reform. The Cruickshank Report from the Competition Commission accused the banks, in the spring of 2000, of making £725 million in excess profits and offering a 'complex monopoly' at the expense of small businesses.

The MPs point out that it has been more than four months since the latest Competition Commission report was laid before Parliament 'with a timetable of six months for implementing all remedies'.

The report continues: 'The committee believes that the largest clearing banks should not profit from procrastination.' And it recommends that the watchdog Director General of Fair Trading should report progress, or the lack of it, to Parliament no later than the end of September.

The criticism of hidden interest rate charges stretches beyond the big banks. The 'lack of transparency' across the credit and chargecard industry is so complex that the committee had to hire a professional mathematician to unravel the detail.

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