JEFF PRESTRIDGE: Don’t trust banks when they say they won’t pass you negative interest, they do what they want
Banks are a law in itself – you know it, I know it, they know it. We have been reminded of this in recent days as newly formed small businesses are struggling to find a bank with which to open a new business account.
It’s a disgraceful turn of events. It just can’t come at a worse time, as many people worry about job security and see if they can go on alone.
According to Coutts (yes, ironically a bank), one in six adults wants to work for themselves. Still, the couches wash their hands off them – even those like Metro who have made a big song and dance for being a small business friend.
Broken promises: take the banks’ promise not to ask savers to hold money in a world of negative interest rates with a grain of salt
In our hour of need, the banks are not there for us.
Don’t trust a banker, I say. So if the banks say they won’t respond to negative interest rates by asking savers to take care of their money – as they did with me last week – take it with a grain of salt.
Let’s not get around it. Banks do what they want more often than not. They can close your bank account for no good reason (NatWest is a master at this); they may refuse to accept your habit; and if you have a difficult business, they can revoke your access to credit.
So don’t rule out paying your bank to save if the Bank of England cuts the bank base rate below zero in the coming months. Banks are a law in themselves.
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Speaking of unfriendly banks, it looks like a head of steam is building over a class action lawsuit against banks Clydesdale and Yorkshire by litigation specialist RGL Management.
The claim relates to the behavior of the two banks with regard to the sale of so-called ‘tailor-made business loans’ to customers between 2001 and 2012.
Loans that, according to RGL, turned out to be prohibitive and, when unraveled, were subject to fees that the banks were not allowed to withdraw.
Last week, RGL filed a new tranche of claims in the High Court against the two banks that were owned by National Australia Bank at the time of the alleged mis-selling, but are now part of Virgin Money. The number of small businesses supporting the collective action is more than 500.
RGL is confident that there will be redress for the companies that have joined the group campaign. But with 6,500 customers of the two banks having received such loans, there are still many businesses that need to register. If you are one of them, visit rglmanagement.com.