BEWARE! THE BANKS ARE OUT TO GET YOU!

[Tizer]

There are more reports in the newspapers about banks treating disabled customers badly. Since The Times started a crusade a few weeks ago it has snowballed and we are finding many instances of appalling treatment, such as demanding that deaf customers telephone the bank when it's impossible for them to communicate that way or wanting them to visit a branch when they aren't mobile. It really does show up the arrogance of banks.

[Stanley]

All these things point the same way. The banks have lost sight of the concept of service to their customers.
Bad news this morning for 15 major banks including RBS, HSBC and Barclays in the UK. Moody's have downgraded their credit ratings because of exposure to the bond market of the Mediterranean countries. The EURO contagion is spreading.

[Tizer]

I overheard a bit of a Today interview this morning and didn't pay much attention until the end when Evan Davies mentioned the name of the interviewee...Victor Tchenguiz, one of my least favourite people, the man who owns a batch of property companies such as Peverel which make many people's lives a misery, especially elderly folk. Have you noticed that there isn't a Wikipedia page for Victor Tchenguiz? I suspect he suppresses it using his lawyers.

[Tardis]

3 UK banks downgraded because of their exposure to Spain and Ireland.

Not entirely sure how Lloyds escaped, because the Halifax bit of HBOS made a right pigs ear of it in Ireland

[Stanley]

I see that Nat west have been having a computer problem. They say they've cured it but the backlog of transactions is still causing problems, they are opening their branches all day today and three hours on Sunday. Pity the poor customers..... Computers give enormous savings in staff but equally enormous problems when it goes SNAFU.

[Tardis]

I stand corrected. Lloyds long term prospects have been downgraded, so the outlook is likely to be bleak for them if the Irish situation results in a default

[Stanley]

I felt quite sorry for the nice lady from NatWest who had the job of going on the radio yesterday to be quizzed by Paul Lewis. She earned her money because Paul asked all the right questions and she hadn't a leg to stand on. The googlie that caught her out was the question as to why the customers were being charged a premium rate on an 0845 line to communicate with them. The best she could come up with was that call charges would be refunded on production of evidence they had been made. Leaving aside the actual cock-up and how it happened we got a glimpse through the furnace door of what can happen when an important IT system goes down. At least 17 million people were financially paralysed as their accounts defaulted to £zero. It brings home how dependent we are today on the ubiquitous chip! (Memo to self: draw an emergency fund out of the bank before it closes and hide it away.... It's not earning any interest so no loss by putting it in the safe!)

[Tripps]

I don't think she said that she wouldn't get a bonus though. Be interesting to see how they spin next year's bonus.

My son said "Dad - you know your idea of having two quite seperate current accounts, and credit cards doesn't look so silly now".

[Stanley]

Tripps, you're right, she did hedge around the bonus question. Your son will have learned a valuable lesson.
Some discussion about the problem on R4 yesterday and it was pointed out that in the small print of the regs covering the accounts there is an item that says the bank will not be responsible for losses incurred because of technical problems. How can that be fair or legal? The branches are on extended opening again today as backlog is not yet cleared.

[Big Kev]

My son said "Dad - you know your idea of having two quite seperate current accounts, and credit cards doesn't look so silly now".

Having 2 current accounts has saved me a lot of inconvenience in the past.

[Tardis]

I believe RBS have implemented some new software, which all the banks have to do because of the new regulations, and they have to do it to retain their banking licence.

The fact that there was a glitch means that it wasn't properly tested for when all the information was ported across from one database to the new one. More likely RBS decided to do everything all at once in an attempt to save money, rather than partial over a period of time which might have flagged up the problem.

On top of which it should provide a valuable lesson to all the other banks...don't use that contractor

Eventually they will tell us why the database failed, but I would guess it would be incompatability.

The fact that it has taken this long to sort, demonstrates just exactly how litle talent from the bank was actually involved in the installation.

[Tripps]

They should have got Pluggy to do the job.

[Big Kev]

I believe RBS have implemented some new software, which all the banks have to do because of the new regulations, and they have to do it to retain their banking licence.

The fact that there was a glitch means that it wasn't properly tested for when all the information was ported across from one database to the new one. More likely RBS decided to do everything all at once in an attempt to save money, rather than partial over a period of time which might have flagged up the problem.

On top of which it should provide a valuable lesson to all the other banks...don't use that contractor

Eventually they will tell us why the database failed, but I would guess it would be incompatability.

The fact that it has taken this long to sort, demonstrates just exactly how litle talent from the bank was actually involved in the installation.

Whoever signed it off, following testing, is in for a kick up the backside.

[Tardis]

Mr Heston has now apologised, and said everything is OK, despite the fact that it isn't.

So that'll be OK then?

I had thought that the bank had gone bust after the downgrade, and thus stopped people getting at their money, or had become a virus victim, but it is beginning to look like protocol errors because of the time it is taking to resolve. Hopefully they aren't having to re-code every page. They must have a lot of monkeys working on it

I do pity the front line staff who will quite literally be shrugging their shoulders because there is nothing that they can do

[Stanley]

I watched Heston making his 'explanation' which was of course nothing of the sort, he avoided direct answers and hedged round issues like compensation and bonuses. Their interface with their customers seems to have failed, many reports surfacing of callers being left on hold or getting automatic messages, the 'sorry no agents available' syndrome. Latest estimate is that the banks will be lucky if they clear the backlog by the end of this week. There's a report this morning about a bloke who was in custody at Canterbury on Friday but given bail. The payment was via RBS and never got through so he had to stay in gaol over the weekend until his barrister explained the circumstances to the judge who allowed him out even though the payment hadn't arrived. Compensation case?
I took the hint yesterday and drew a small float for the petty cash which I have stowed away in the old oak chest in case I ever suffer the same loss of service. Frightening stuff actually, we are totally dependent on the life support of the chip driven economy. You've never had it so good......

[PanBiker]

"We have broad shoulders and the funds to sort out any eventuality" or words to that effect. Pity that was not the case in 2008 when we had to bail the buggers out!
I know it's a software failure but they should be taken to task big style for not having a sufficiently robust contingency plan. Why does the term p up in brewery come to mind? Glad I don't have any funds with them, having said that, I wonder how good the Australian banks IT is!

[Tripps]

The "line to take" by Natwest spinners on bonuses seems to be "that's the last thing I want to think / talk about at the moment - I want to concentrate on the wonderful work our wonderful staff are doing to fix the problem.
The think we have short memories - trouble is they're probably right.

[Stanley]

Not all of us! I agree with both of you and was struck yesterday by the fact that the figure of 17.5million people affected is far too low. I came across a case where someone with another bank is in trouble because his wages come out of an RBS account and so he is affected just as badly as an RBS customer. Just been announced that RBS is cancelling all its corporate hospitality at Wimbledon, oh goody! That'll help! RBS have sent a letter to the mortgage industry warning that new mortgages may be affected. Theory is that they have had to throw all their staff resources at the IT debacle and this is slowing down other bank operations that wouldn't otherwise be affected.
As for what sanctions should be applied to RBS on the grounds of incompetence. I wonder what sort of conversations are going on between their IT contractor (almost certainly is one) and the bank about liability and consequences. Next thing we will hear is 'commercial confidentiality' or 'sub judice'. I don't know about 'too big to fail', perhaps they are too big to manage!

[Tardis]

Love the fact that RBS appear to be blaming "a fat fingered low paid operative in India" for pressing a delete button

[Tardis]

Anyone catch the Reith lecture yesterday on Radio 4.

Refreshing to find someone willing to point the finger at the politicians rather than the bankers who simply operated within the regulatory system that the politicians built

I was applauding at the end. Very brave BBC, and certainly shows up Peston

[Stanley]

I've been listening. Martha sent me his latest book 'Civilization' and while I haven't finished it yet I agree with her that he tends to be selective with his evidence and in some places I disagree with him. However, he is taking a fresh view and it is in the nature of historians that they tend to push their own view and eventually it is modified and becomes more accurate. Not sure how it damages Peston. He has a point of view as well. Time and revision will sort out who was nearest the truth.
Barclay's have paid $450million to the FSA and the Feds to make the LIBOR rates investigation 'go away'. It might not be as easy as that because the man in charge of the investment arm at the time the rate was being manipulated by the bank was Bob Diamond. Other banks are being investigated as well, this is not the end of this. The LIBOR is the the average of inter-bank lending rates and is adjusted daily. It is used as the basis for rates charged on loans across the whole of the financial system so the number of borrowers overcharged on interest cannot be measured, it is too big and all the excess payments went into the banks eventually. We haven't seen the true size of this fraud yet and already commentators are pointing out that there is a simple remedy for the failing. Reduce the size of the banks, they are not only too big to fail they are too big to manage. We were treated to Angela King on the news last night defending the indefensible. Her appearances should have a government health warning!
On the IT failure at RBS, a letter has surfaced sent to an MP in 2009 warning of the consequences of sacking experienced staff and replacing them with outsourcing and cheaper Indian recruits. Private Eye are on the ball. Here are some quotes they publish in this week's edition:
Computer Weekly, 11 Feb 2009. RBS is cutting 2,300 jobs across its back-office operations in the UK.
CW 2 September 2010. RBS is axing 1000 technology jobs and plans to offshore upwards of 500 technology roles.
Straws in the wind but I think we can see the similarities to other IT fiascos of recent years. Sack experienced staff, outsource to a contractor offering cheap rates and thus cut down on the costs. The question for RBS at the moment is how do the savings match up with the costs they will incur in the present chaos. Could someone do a cost-benefit analysis for similar failures in the tax system, the NHS and the Justice system? This is not a failure of regulation, it is the collapse of core moral principle among certain sections of traders and management and I am afraid that this is more widespread than just the banks.

Thinking about justice, the discussion this morning is whether Hester and Diamond should resign. It should be a given. In the case of Diamond the question should be when a full investigation and prosecution should be started of all those complicit in the LIBOR fraud. The defence of 'I didn't know it was going on' should be rejected. The emails which the US have obtained show where the smoking gun is.

[Stanley]

John Humphrys has just played part of the Today lecture that Bob Diamond made a year ago when he advocated ethical practices and customer service. Sounds a bit hypocritical now...
Can't help thinking about Nye Bevan speaking about Anthony Eden after Suez. "If he knew, he's too evil to be Prime Minister, and if he didn't know, he's too stupid to be Prime Minister." It was a good point then and the principle is good today. Roosevelt said "The buck stops here" (on his desk). There are some of us who believe that the genesis of this culture of greed started during the Thatcher era when the City of London was seen as the engine of growth and manufacturing industry, particularly the 'smokestack' and extractive industries , was allowed to go to the wall. Remember the yuppies who were given freedom to make obscene wages on the grounds that they were making loads of money for the banks?

[Tardis]

This LIBOR stuff was attentuated apparently in 2010 after the election when George Osborne said goodbye to the FSA, there are people saying it is still happening, but then that is how they set the LIBOR rate. The BoE doesn't just set the rates, it talks to bankers before it does. that stuff about the 1980's is just wrong, check out the history of LIBOR.

This is not a success for the FSA, because they had to be told that it was happening right under their noses and were supposed to be regulating. A whistleblower told them, and then Barclays turned evidence provider so their fine would be reduced.

So chalk up another failure to the FSA, and the politicians back then who were looking at the LIBOR rate to influence exactly what their reactive policy was going to be.

Ultimately, in private companies it is up to the shareholders

[Tardis]

At the Town Council meeting last night they had the HSBC on the agenda. The closure is welcomed by both the Yorkshire Bank and Lloyds as they cureently have no plans to close which does puncture somewhat a certain election leaflet.

Lloyds have said that they will refurbish the branch hopefully in 2014.

The co-operative bank is trying to sign up the business people via the FSB with free banking, as they can use the post office.

[Bruff]

Don't understand that post at all. Are you saying that the reason for the activity that led to a multi-million pound fine was an ineffectual FSA, and once the FSA was removed from the picture, the activity stopped (or was 'attenuated'), for presumed fear it would be uncovered by a more competent agency. And so therefore, this activity that was deemed fit for a significant sanction is the fault of the FSA and those who set it up, and nothing whatsover to do with any failing among those who carried out the activity? It's certainly an interesting perspective.

The regulatory framework may well not have been fit-for-purpose or perfect, and some politicians have acknowledged as much. But then no system ever is or would have been. And any relies on the good offices of those who are meant to abide by it. A crook is a crook after all; no amount of regulation or design of regulation, and its oversight, will stop them.

Richard Broughton