With the supreme court set to rule on high charges for bounced cheques and the Office of Fair Trading’s ongoing probe into unarranged overdraft fees, banks are taking pre-emptive action and scrabbling to find new income streams. Many will doubtless hit on the (hardly novel) idea of charging more widely for the services they provide: perhaps via a flat monthly fee, perhaps via transaction-related levies. Either way, they can expect a mass cry of “it’s not fair” from the Great British Depositor.
Naturally, these are the same people who will pay for service in restaurants, swallow retailers’ mark-ups and possibly even tip their hairdressers. Some will argue that, unlike Michelin-starred eateries and designer boutiques, banks are a social utility. Good point – and all the more reason to charge the non-indebted classes rather than subsidising them through egregious charges on those who fall into the red. These penalty fees pulled in about £3bn a year for the banks when the OFT investigation began in 2006. That is a big hole to plug and the banks owe it to their shareholders – who, let’s not forget, include the tax-paying public – to find ways of doing so.
But if you charge for a service, you do need to improve it. That means no more tellers intoning “computer says no” every time they are asked to do something other than a bog-standard transaction. It means “relationship managers” who go through customers’ accounts and call when they see cash lying idle or funds running dry. And it means axing every single automated calling system, replacing them with real humans, so no one needs to hear the words “press six to repeat these options” – each of which will lead you to another six options – ever again.
Virgin no longer
Sir Richard Branson’s pose as champion of the underdog is wearing thin. His attempt to compare British Airways’ lockhold on transatlantic slots from Heathrow in the 1990s with British Sky Broadcasting’s position now is a stretch.
BA was a former state-owned group with a protected position. BSkyB, by contrast, is a business that took (and takes) risks, competed (and still competes) for premium content such as sports rights, and continues to win market share mainly by being better at what it does than competitors. Rather like Virgin Atlantic did when it first took on BA, in fact.
Not all the synthetic outrage is Virgin’s, however. James Murdoch, BSkyB’s chairman, is equally capable of playing the underdog, when convenient – as his August lecture attacking the BBC’s dominance showed. His remarks to shareholders at Friday’s BSkyB annual meeting were similarly pugnacious, urging Ofcom (which is investigating Sky at Virgin Media’s prompting) to let the benefits of private enterprise emerge.
Both men could take a lesson in candour from the late Lord King, Sir Richard’s antagonist. He was one of the few businessmen prepared to admit that the logical end of his mission as BA chairman was to establish a monopoly. Both Sir Richard and Mr Murdoch would fight as hard as Lord King did to cling on to a dominant share of the market. Provided the rules are observed and customers aren’t injured in the struggle, there’s little wrong with that.
Back to the starting grid
Oscar Wilde described foxhunting as “the unspeakable in pursuit of the uneatable”. The farrago surrounding the British Grand Prix looks more like a case of the unspeakable in pursuit of the unfundable, following the failure of Donington Park’s attempt to issue a £135m bond to pay for improvements ahead of next year’s race. Those improvements are already under way, leaving Donington in the unenviable position of having neither a track record to convince potential lenders, nor a track to race on.
Nobody comes out of this looking good. Donington’s bid for the Grand Prix has blown up. Bernie Ecclestone, the Formula One rights holder, may have to return to Silverstone, the circuit he surprisingly – and riskily – spurned. Silverstone is ready to step in, but itself conceded this week that despite hosting the “most commercially successful Grand Prix on the calendar”, motorsport margins were very slim. Absurdly, despite all this, the claim that Formula One needs to keep Britain on its Grand Prix map is still strong – and getting stronger: not only are successive champions Lewis Hamilton and Jenson Button British, but much of the hardware is built in the UK. This is the sort of virtuous circle that, when running smoothly, ought to benefit everyone. But for some reason it has stalled. Now it’s up to Mr Ecclestone to restart it.
Bank charges: firstname.lastname@example.org