Banking Red Tape – it might take more than the Government’s new Bill to sort this out!
If the levels of service suffered by one tiny cricket club are amplified across the business world it’s no wonder bank bashing is still a national sport!
A few years ago the world was awash with cash as our casino banks moved billions around the globe under the guise of all sorts of instruments the ordinary man on the street could never hope to understand. Unfortunately it finally emerged that these banks were also struggling to understand the difference between a collateralized mortgage obligation and a large black hole in a balance sheet.
It also emerged that these same high flyers were not exactly paying too much attention to who they moved large sums of cash for. Indeed, subsequent fines imposed by regulatory bodies indicate that Garcia the cocaine exporter often received the same level of customer service as a global conglomerate operating legitimately.
As the world held its breath and teetered on the edge of bankruptcy something clearly needed to be done. And as the loyal taxpayers amongst us stumped up the cash to keep the banks from failing we all hoped that new regulations, and a closer scrutiny of both products and customers, would stop it ever happening again.
From the non-existent to the ridiculous
The change from FSA to FCA saw our banks close their tills to new customers and sharpen their pencils in respect of existing ones. Unfortunately the usual “one size fits all” policy of traditional banking has even extended to this new drive at due diligence which brings us nicely to that tiny cricket club mentioned above.
Formed over 200 years ago the club in question has changed little since. Although enjoying one of the most picturesque grounds in the south east players still change in a shed and enjoy tea in a barn. Player subscriptions, vice president’s donations, the odd pub quiz and a modest profit on teas generate an average annual income of £1,600 for this strictly village fun side.
Banking arrangements (everyone needs them!) have historically leaned towards the building society model. The original account, in pounds, shillings and pence, was opened at a local south coast independent long before it was swallowed up to form part of a “nationwide” big hitter. And this big hitter is clearly taking the issue of retrospective due diligence very seriously.
Who are you?
Despite being in the post for a number of years, and with a signature clearly added to the passbook under the scrutiny of an historic society officer, the club treasurer has had a frustrating time as the new season gets under way. Whilst attempting to withdraw the colossal sums of £140 for public liability insurance and £40 to cover the tea ladies float, the shutters came down amid demands for all sorts of documentation now required under their new procedures for clubs and societies.
It’s difficult to provide a constitution when you don’t have one. It’s also difficult to provide audited accounts when the bookkeeping relies on the building society passbook and an A4 accounts book meticulously kept and signed off at each AGM. The request for club letterhead was reportedly a little easier to provide however as anyone with a basic knowledge of Word and the ability to copy and paste will know.
The Queen said it
Introducing the government’s Small Business, Enterprise and Employment Bill, the Queen’s speech promised to “support small businesses by cutting bureaucracy and enabling them to access finance.” Unfortunately if a cricket club with an annual turnover of £1,600 has to jump through a number of hoops in order to get its hands on less than £200 of its own money the job looks like being a tough one.
Of course red tape could be avoided in a number of cases if these institutions got to know their customers or prospective customers a little better. The perceived approach of guilty until proven innocent, and a reliance on algorithms leaves little time for common sense to prevail or for mutual trust to prosper. In respect of cases like the cricket club the alternative really is to withdraw all the cash and keep it in a tin under the bed which is hardly a step forward for commerce.
Failure fallout
It’s unfortunate that drug smugglers and money launderers appear to have enjoyed the easier times when it comes to banking and those now trying to make an honest living or simply enjoy a gentle summer pastime are paying the price. And leaving the final word with the cricket club, the treasurer in question would like it made clear that the timing of her withdrawals has nothing at all to do with her imminent trip to Colombia!
by Steve Leeves