Banks are a law unto themselves – you know it, I know it, they know it. We have been reminded of this in the last few days as newly formed small businesses have struggled to find a bank that will allow them to open a new business account.
It is a disgraceful state of affairs. It just couldn’t come at a worse time as many people are worrying about job security and looking to see if they can strike out alone.
According to Coutts (yes, ironically a bank), one in six adults are looking to work for themselves. Yet the banks are washing their hands of them – even those such as Metro that have made a big song and dance out of being a friend of the small business community.
Broken promises: When the banks intimate that they will not respond to negative interest rates by charging savers to look after their money take it with a pinch of salt
In our hour of need, the banks are not there for us.
Don’t trust a banker, I say. So when the banks intimate that they will not respond to negative interest rates by charging savers to look after their money – as they did to me last week – take it with a pinch of salt.
Let’s cut to the chase. More times than not, banks do what they want. They can close your bank account for no good reason (NatWest is a master at this); they can refuse to take your custom; and if you’re a struggling business they can withdraw your access to credit.
So don’t rule out being charged to save with your bank if the Bank of England cuts bank base rate below zero in the coming months. Banks are a law unto themselves.
Talking of unfriendly banks, it seems a head of steam is building over a class legal action launched against banks Clydesdale and Yorkshire by litigation specialist RGL Management. The claim relates to the two banks’ conduct over the selling of so-called ‘tailored business loans’ to customers between 2001 and 2012. Loans that RGL alleges proved both prohibitively expensive and when unravelled were subject to fees the banks were not entitled to take.
Last week, RGL filed a further tranche of claims in the High Court against the two banks that at the time of the alleged mis-selling were owned by National Australia Bank, but are now part of Virgin Money. It takes the number of small businesses supporting the class action to over 500.
RGL is confident of obtaining redress for those businesses that have joined the group action. But with 6,500 customers of the two banks having been sold such loans, there are a lot of businesses yet to register. If you are one of them, do visit rglmanagement.com.