Don’t be fooled by profiteering banks

What a handy distraction it makes for the banks to stand accused of closing down accounts held by Nigel Farage and others on the basis of their political views. It is a distraction because otherwise the big banking story this week would be a meeting between the Financial Conduct Authority (FCA) and the large banks to discuss just why savings rates have failed to keep pace with mortgage rate rises.

According to Moneyfacts, the average rate of a two year fixed-rate mortgage has climbed to 6.4 per cent. Meanwhile, savers with instant access accounts have to make do with a measly 2.4 per cent. That is a yawning gap which simply wasn’t possible to maintain during the long years of near-zero base rates. But it is a powerful generator of profits now.

The reality is that all the virtue-signalling stuff is being used as a cover for the banks’ other failures. They find themselves championed on the left for blocking Farage’s accounts. They pose as great promoters of diversity – it seems that pretty much all the main banks are signed up to Stonewall’s diversity scheme. Yet at heart the banks are the same ruthless capitalist institutions as they ever were and will use every trick in the book to squeeze profits out of us.

In fact, in many ways they are far worse than they used to be. Customers used to be rewarded for loyalty; now they are punished. If you want even a half-decent return on your savings you now have to go through the tedious business of opening a new account every few months – while the interest rate on your existing accounts is allowed to wither to virtually nothing. Most of us fail to do this, with the result that we end up paying a hefty loyalty penalty.

Added to this of course, as the FCA has spotted, banks are far quicker to jack up mortgage rates than they are to increase savings rates. When rates fall, needless to say, it is the other way around: savings rates fall quickly, while mortgage rates linger at high levels. There will likely be some cosy agreement between the banks and the FCA – the expectation is that banks will agree to keep customers better informed of how little interest they are earning on their savings. But there will be no big change.

At the same time, the banks will carry on disenfranchising their poorer and older customers by closing bank branches and forcing them reluctantly online. They will carry on facilitating fraud by failing to close down accounts which are being used by fraudsters quickly enough. They will carry on taking big risks in the belief that they are too big to fail, that the government will always step in to bail them out if things go wrong.

But hey, look, they are great champions of diversity, pushing staff to wear pronoun badges and the like. It is a very thin veneer of social conscience which should fool any of us.