Banking Service : Delusion and Misconception

Banks in General

Banking service and banks in themselves are often thought of being of the same order of dependability as doctors, lawyers and priests. Nothing could be further from the truth. Although banks are often accorded the same degree of trust as these three latter professions they would more correctly be bracketed with politicians, music hall second-hand car salesmen and some casual market stallholders. Banks are in business to make money for their shareholders. They do so by eliminating problems and hiding charges to customers. They have no concern for the personal problems clients have in dealing with them. Their guiding principles are "make money", "hide the true nature of fees" and "dispose of any difficulties". For "difficulties" in this last sentence read "customers who require good banking service".

With These Friends you Don't Need ...

The above characterization of banks and banking service may seem harsh. It is not. Banks have been caught illegally fixing interest rates for their own benefit, raising charges between themselves which are eventually passed on to customers even though such charges balance out to a relatively small burden on any given bank, giving grossly poor financial advice to encourage investment by clients in schemes which can only fail but which, until they do, hugely benefit the banks.

Banks have been known to operate in collusion with insurance companies to offer policies from which perpetual commissions accrue to the seller and which are not revealed to the buyer. The conflict of interest and artificially high premiums caused by such practices are clear.

Inter-bank charges raised by virtue of a customers using ATMs not owned or managed by their own bank have been grossly inflated. In some countries bank clients have initiated class actions against banks for such  and similar charges. Banks raise charges to "clear cheques" and cause losses for customers owing to inordinately long times for transfers of money to be made when cheque clearances and transfers are done electronically or digitally at virtually no cost and in micro-seconds respectively.

Banks are frequently happy to pay millions of dollars/pounds/euros in compensation when legal cases are lost. This suggests only that they are confident that there are an endless supply of hidden fees which can replace such "losses".

Sometimes banks do pay the ultimate price for dishonest dealing. In America the demise of Lehman Bros, the fourth largest investment bank in that country, was caused by the organization knowingly selling packages of mortgages as investment vehicles when it was clear that such packages were financially unsustainable. Their banking service was palpably dishonest.

Who Pays? Not the Banks!

Although other banks were involved in what came to be known as the "Housing Bubble" only the U.S. investment bank Lehman Bros was allowed to fail. Other banks were bailed out by the government, that is, by taxpayers. In effect those who had been duped by the phoney investments paid to rescue those who had perpetrated the scam. No other banks failed and no individuals, who initiated and who were aware of the schemes, have ever been held responsible for their actions. The same is true of the interest rate fixing scandal in Europe. These elements were major factors in the Global Financial Crisis which began in 2007. 

Banks have proved themselves as unworthy of trust as are the politicians who facilitated their survival with taxpayers' money. The Global Financial Crisis proved the incompetence of both groups. The continuing financial problems in Ireland, Cyprus and Greece proves that the survival of Europe's banks and rulers is possible only by virtue of the plundering of the hard earned funds of ordinary people.

In the U.S.A. continued "quantitative easing", a euphemism for the printing of money, is robbing the U.S. dollar of global legitimacy and the population of value.  The above comments should dispel the delusion held by many about banks. Unfortunately this will probably not occur largely owing to the hiding of facts by the political systems and politicians involved. 

Who is to Blame? Not Those Fleeced.

Personal Banking Service

It is a misconception that banks can or want to provide more of a "banking service" than is necessary to maintain profits. As yet most people have not found a substitute for banks where money is concerned. In fact, for anybody who cares enough, banks are no longer necessary. As the fiat currency systems in countries collapse, as they surely will, alternatives will be adopted.

Such new phenomena as "Bitcoin" will be seen as providing financial and political freedom. Just as a barter system was replaced by a monetary one so the latter, now discredited, its symbols, notes and coins of no intrinsic value, will fail and be replaced.

No fiat money system has ever survived. All have failure built into their DNA. This trait has been enhanced and hastened by the fractional reserve banking system which has tried desperately to make a virtue of debt. Slowly it is being realised that the way to get out of debt for a person or a country is not by borrowing more.

Most will have noticed that the banking service now provided to individuals and also to companies has deteriorated over the years. The days when a bank manager knew his customers as real people have long past. It is impossible to have any kind of relationship with an ATM. Many bank branches cannot be contacted directly by telephone and it is impossible to contact either the manager or a particular staff member other than by going to the branch. Many branches have become simply a series of machines with a telephone access to a central service via a dial-less instrument which calls a fixed call centre only.

In truth banks provide almost no personal service now and what there is will be diluted further and will eventually disappear. The less personal contact with clients the better banks like it. Correspondence can be answered at the bank's convenience, or ignored and telephone calls are deniable. The facade of a complaints system, which does no more than issue a number when a client does manage to get the fact of dissatisfaction through to a bank, is often led by a department with a name such as "The Business Standards Section". Such a section maintains no standards which benefit customers and lead ultimately to a terminated complaint via an ombudsman whose independence is dubious and whose speed is pedestrian at best.

No Service -- No Help

Any concept of a personal banking service is a pure fiction maintained only by advertising and by keeping employees who may be between customers and management ignorant of banking policies. Managements spend the whole of their time in devising new, obscure and non-transparent charges and maximizing benefits for themselves and shareholders.

True Experiences with Banking Service

Governments are complicit in the deterioration of banking services. This is most famously demonstrated in the toxic piece of American legislation known as the Foreign Account Tax Compliance Act (FATCA). Under cover of the over arching and innocuous sounding Hiring Incentives to Restore Employment (HIRE) Act FATCA requires foreign financial institutions to report to the IRS details of the accounts of anyone with connections to the U.S.A.

The reporting requirements are onerous and among the penalties of failing to report is the withholding of 30% of any transfers from the U.S.A. by "offending" organizations. This penalty is too much for most businesses (banks, stock brokers, realty companies etc) to risk. They are increasingly establishing compliance with FATCA by forcibly closing the accounts of those clients with any American connection and refusing to open new accounts for such possible clients.

Individual businesses do not have to assent to be compliant with FATCA. Governments can make a blanket compliance agreement and force cooperation via local legislation. Countries do this in the expectation of the U.S.A. authorities providing exchange information on their citizens' dealings in America. The provision for the giving such information is in the FATCA legislation. However, no other government can expect to recieve any such information because its supply is specifically prevented by other IRS legislation. FATCA is a major limitation of the freedom of individuals, is dishonest towards compliant countries and is a major disruption to U.S. economic activity abroad.

FATCA impinges upon businesses and individuals alike. Banks take the easy way out by opting to have no one with U.S.A. connections as customer regardless of the effect on such persons. Notice of six weeks to close an account is common. The difficulty for people to make alternative financial arrangements is obvious but banks are uncaring of the plight of clients who may have had satisfactory relationships with them for over 50 years.

This piece of U.S. economic hegemony foisted upon so called allies and friendly countries affects those who had no idea that they had any connection to the U.S.A.  An 87 year old Canadian was arrested on visiting America because she had not reported to the I.R.S. on her bank accounts in Canada. She was born of Canadian parents in America who returned with her to their home country when she was about a year old. She had no American tax liabilities nor any awareness of the need to report to a country of which she was neither a citizen nor a resident. The intervention of the Canadian government was necessary to secure her release. The I.R.S. does not care about human beings. Banks are equally responsible for complying with America and their local legislation.

Truth - Don't Look at Banks!

One customer, after banking with a U.K. bank for over 50 years was sent a half page letter requiring him to close his accounts within six weeks. No reason was given and the bank was explicit in stating that it needed to give no reason. He had tried to open a new local account with "his" bank but made the mistake of admitting to being tax resident in the U.S.A. two years previously. He owed nothing to the I.R.S. He knew nothing of FATCA. This meant nothing to the bank which was uncaringly silent in dismissing his custom . He discovered the reason "unofficially".

Another person has found that banking inefficiency has worked in his favour. He had two offshore accounts at different locations in the U.K. with the same bank. He had always kept the details of his changes of address and other personal details up to date with the management at the branch with which he normally dealt. Always he requested that all branches be updated with any changes in his personal details. After being told to close all his accounts the branch with which he only rarely had dealings continued to handle his account. It had never been advised of any changes A thirty year old address was still retained and it failed to become aware of his changed status from a joint account holder to a widower. This pathetically poor service acted in his favor until he relocated his financial arrangements.

Dealing With Banks

From the above it can be seen that any conception of a good banking service no longer exists. Dealings with bank can no longer be regarded as confidential nor always beneficial. Banks have forfeited the right or expectation to be treated with trust and respect by customers. Caveat emptor applies to any arrangements with them. Banks should be told by prospective customers only so much as is necessary to achieve the desired outcome. Any reason for the idea of loyalty by a client has disappeared. As soon as the reasons for dealing with any particular bank changes or a desired result is no longer achievable a customer should peremptorily close all accounts after alternative arrangements have been made. There is no reason to stick with a bank that cannot perform.

Ever True

The veracity of the first paragraph above should now be clear. It is every man for himself -- an attitude that banks have been adopting for themselves for a number of years. Retirees who are likely to have had long term arrangements with the same bank should be acutely aware of the above changes with regard to their banking service. A change of country can precipitate many unwanted consequences with surprising speed. Only full knowledge of the facts can avoid problems and disasters.


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