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Why I will never buy a financial product from a bank
Posted on March 27, 2008 by stevemcdowell
Filed Under Ramblings |
Just a quick one to fit my inadequate feet into Richard’s very large shoes (well, usually dubious trainers actually, but don’t tell him I told you so) while he’s on holiday.
Rather than give the usual immaculate research and splendid detail which normally form the basis of Richard’s missives, I’m just going to report an incident which you may view as a parable about the health of the high street banking industry.
Across Britain’s noisiest roundabout at Aldgate on the edge of the City of London there is a branch of NatWest. It’s the only one within a considerable radius of our office as I suspect the less than salubrious end of Whitechapel High Street is not a place deemed suitable for a wine bar or a branch of Pret a Manger.
It is therefore a relatively convenient place to pay in a cheque – I know, I hadn’t seen one for ages either.
Happily, and unusually for a bank, there was no queue snaking out of the door, and better still not one populated by people who own amusement arcades and wish to pay in a wheelbarrow of small change.
I said a cheery hello to the smiley girl behind the counter and paid in my cheque.
She tapped, tapped at her keyboard.
“Have you got a mortgage?” she said.
“Two, actually, “ says I.
“What rate?” she said, still smiling at me.
“Fixed trackers at 0.5 per cent below base, I think. ” I said, not sure, and beginning to feel the heat.
“When does your fix expire?”
Now, I don’t know about you, but I HATE being sold to. I know salesmanship drives industry and it makes the world go around. I number sales people among my friend and among my most esteemed colleagues. I spend hours designing ways of making editorial propositions attractive to investors and advertisers, but personally, I can’t bear the experience. I hate the pressure, I hate the fact that I now have a need and a desire in my mind that it had not hitherto occurred to me to feel.
“Do you want to speak to our mortgage adviser?” she said. “She’s right over here.” Says my new friend pointing to a startlingly attractive (for a bank employee anyway) lady in a grey business suit.
Oh no, she’s come over to the window.
“I can fit you in later on today if you like” she says.
“Out of the question,” I said, “Very busy I’m afraid.
There is no-one in the bank at all now, except these two ladies, and the unemployed teller sitting next to my new best buddy who has also fixed me with a moon-faced kind of air stewardess smile.
“I have a broker who deals with all that,” I mutter.
“Do you pay him?” she says.
They are all looking at me like I am insane for resisiting. I feel like I am an inductee for some cult. Now I know how it feels to be a heretic.
“I can make you an appointment next week. When can you come in,” she says.
“Yes,” says the mortgage adviser, “I’ve got a free slot. Shall I book you in for Tuesday at 3pm?” Her pen is out. The faintest nod or facial tic on my part would constitute a contract as far as she is concerned.
I consider myself to be a polite person at heart and don’t want to be rude to people who are merely executing their duties with enthusiasm. But I want to run away screaming.
What I wouldn’t tell them then, but that I will tell you now is this.
Doing what I do for a living I written about and researched banks until the sun eclipses twice in a day. As a result I WILL NEVER BUY A FINANCIAL PRODUCT FROM A BANK, regardless of how “independent” the sales person, sorry, adviser claims to be. Pension mis-selling anyone?
But what I have been left musing on is this.
Credit crunch. Interbank lending shut-out. Mortgage market crackdown. If any of that is really true – no one has got round to telling the ladies of NatWest in Whitechapel High Street.
Now then, how cheap does NatWest stock look?
Comments
6 Responses to “Why I will never buy a financial product from a bank”
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Hi Steve,
My first impulse was to say ‘I agree with you’.
However, my second thought was, yes, for personal finance, I have sufficient knowledge to make my own decisions, but if I wanted to set up a small business, for example, I would welcome the advice from the banks.
My point being that, some people will want help with personal finance and you may as well start with the banks (IFA’s are not necessarily all angels either).
My very first pension was arranged at the suggestion of my ‘bank manager’ many years ago for which I was grateful. Admittedly I suffered from terrible returns for years afterwards but that is a problem with our UK educational system and not the banks.
It was only later that I realised that you could get much better deals and better returns through IFA’s, and more recently, online by myself.
The same may well apply for small businesses; I do not know (but I may well be finding out later in the year
)
I would also say that some of the actual deals offered by the banks can be highly competitive and should not be discounted just because they do come from a big name (thank god for screen scrapers)
Anyway, thanks for the article. It got me thinking …
Robin
I use to buy this kind of products.
Thanks Robin, the experience got me thinking too. The upside I suppose is that if banks want to find their way out of all this, fighting for it with tenacious sales techniques is as good way to go about it. As an investor I can dig that, but as a customer I left the bank a bit bewildered.
Best
Steve
Hi Steve
If there’s been a huge bubble in derivatives like there was, say, in technology seven years ago then tenacious sales techniques won’t save the banks any more than they saved the internet startups, chip makers etc in 2001. What goes round comes round I suspect, and they’re in for a few bad years at least. The reason I wouldn’t invest though, is that it seems to me financial companies are run in the interests of their managers i.e. bankers and their fat fees and not shareholders. Even before recent shakeout banks and investment banks were on low pe’s. Now we know why.
Hi Richard,
There is certainly a very interesting thing going on with the banks right now and it is hard to know what to make of it (and I am unfortunately caught in the middle of it). Basically the banks are shutting the doors on new mortgages and making remortgages very unattractive. The bank of England base rate seems to have no bearing on this at all.
This will virtually guarantee to drive house prices down, creating negative equity, and will guarantee to make more people default. While IFA’s are no angels, I think the bank’s will win the prize for being the biggest ******* (insert your own word here).
Cheers!
Hello Thought I would give you another perspective from someone who does actually work in a bank (well Building Society but I guess we are not discriminating here) I have worked both IFA and Tied and I have to say I would go with Tied every time. Our internal compliance is impeccable and whilst we are told it is there to help us it does sometime feels the opposite. This is how I know you are getting the best advice possible.
At the end of the day we all have targets whether we are in sales or not. And contrary to popular belief we do actually want to help our customers and how else can we do this but by approaching our customers at the counter. In today’s climate everyone is making cutbacks and approaching at the counter is our way of gaining business.
We don’t always get it right but we do try and I know personally I do actually care about my customers and so much so that my first sale 19 years ago still sends me Christmas and birthday cards every year.
It may actually upset you when we approach you at the counter but at the end of the day if we can save a retired customer £20 a year on their home insurance who says asking the question wasn’t worth it. Because believe you me £20 to some of my customers who rely dearly on income is a lot.
So don’t forget we have wealthy customers and also not so well off customers some of which are grateful for the time we take to help them some are not – But we can’t please everyone.
I am proud to be a member and an employee of the Nationwide Building Society.