Bank manners
JOHN BULL
It may seem a little strange, but it was a Conservative Minister who was the last politician to say that, despite its protestations to the contrary, British business doesn't really regard competition as healthy. In an import- ant pre-election speech in which he outlined Tory policy, Sir Keith Joseph said that, left to itself, industry would carve up the market and do its best to keep any newcomers out, and he hinted that the Monopolies Comi mission ought to remain in some form or other, to curb excess.
His argument ought to be considerably strengthened by the behaviour of the big four clearing banks. They may well be financial giants, but at present they seem eager to play at Goliath. The David in question is the Co-operative Bank and the clearing banks have united against it. Ganged up would be a better phrase. The clearing banks have decided that they would in future charge 4s on all Co-op cheques cashed at their branches under Co-op cheque card arrangements, although they cash each other's cheques free. This is the same sort of charge they make on cashing cheques against Eurocards and foreign cheque cards.
The clearing banks have muttered vague explanations on the lines that to include the Co-op in their cheque scheme would open the way for other banks, some small and some foreign, to also join the scheme. A more plausible explanation is that the banks have been caught by surprise, and become a little alarmed by the growth of the Co-op bank. For many years they blithely regarded it as just a relic of cloth-cap socialism. But, although it only has twenty-five branches to the Clearing House Association's 12,000, it has expanded its facilities throughout the whole Co-operative movement, which means it has some 5,000 banking points throughout the country. It offers its facilities during usual shopping hours, and that includes Saturdays. I know many a City man with accounts at the Big Four (an ominous sound- ing phrase) who regularly uses his Co-op manager, instead of his local publican, as a weekend bank manager.
It could be that the banks are wary of the Co-op for the simple reason that it offers a service to the customer that has quite a few advantages over that of the clearing banks. Money Which? placed it at the top of its banking survey. Its charges are lower, around 7s 6d for a page of about 30 entries, which works out at about 3d an entry compared with the clearing bank charges of 9d to Is 6d an entry. Its current accounts are interest bearing, and it has a slightly lower charge on personal overdrafts and a slightly higher • yield on special deposit accounts,
The real challenge to the clearing houses' position, however, is likely to come in the next year, when the Co-op bank applies to join the Clearing Houses Association. At present the National Westminster clears its cheques. If the Association lets it in, it will be the first new member for over thirty years. If it decides to keep it out, the Association will be well and truly open to charges of restrictive practice—there is already a move by some Labour MPS to have this cheque charge business challenged under the Restric- tive Trade Practices Act. With some glee, Dr John Gilbert and Mr Eric Deakin have asked the Board of Trade to investigate, claiming that the clearing banks have always shown themselves 'terrified of practising the free and healthy competition that their re- spective chairmen so frequently prescribe for everyone else as the remedy for the nation's economic ills'.
All in all, it has been a trying year for the banks. They have been restricted by Mr Jenkins and the economy, they have been forced to reveal their profits for the first time, and they have encountered serious rivals. On the big business side, the American banks are making rapid inroads. A new book on The London Clearing Banks by Pro- fessor Edward Nevin and E. W. Davis (Elek Books, 5 guineas) reports increased de- posits in this country from £3,283 millions in 1967 to £5,301 millions in 1968.
But whatever the banks' problems, it is the customer who is suffering. Banking hours get shorter as charges get higher, and many managers admit that they find the small current account holder more trouble than he's worth. It would be a good idea if bank managers were to come out of their cup, boards and into the open,
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