Where to go when you don't trust your bank manager

Advice for SMEs.

Whether that business is large, small or part of the squeezed middle, there is little doubt that the fight to find and keep customers - and indeed to make money from them - is harder than it has been for a long time. One area where this is very evident is in the continuing struggle to access funds. Many owners of small and medium-sized businesses are still finding it difficult to get the funding they need from their bank.

The banks counter this criticism with a valid argument that the demand simply isn’t there and many would-be borrowers simply don’t want to take on more risk at a time of great uncertainty. Nevertheless, figures reporting the number of loan applications turned down suggest that the banks are still busy taking risk off their balance sheets and as a result are either refusing to lend at all or setting very high prices on their lending.

While it is clear that the banks are in a difficult position — castigated for being both too reckless and now for being too conservative — there are some very serious long-term implications from the apparent breakdown in relations between small business owners and the banks.

It wasn’t all that long ago when bank managers were the most valued and trusted advisors for those running small businesses. 

But as a recent survey (organised by Hitachi Capital Invoice Finance, which admittedly competes directly against banks to provide an alternative means of finance) shows, trust in bank managers is currently low. Only 21 per cent of SME owners questioned said they would trust advice from their bank manager. While it’s easy to dismiss the report’s findings as a PR exercise, they tally with other polls measuring the general public’s opinion of bankers (notably the Edelman’s Trust Barometer).

Put a group of business owners together in a room to talk about finance and it won’t be long before one or more bemoans the loss of personal banking relationships and the switch to centralised, call-centre style customer service. The days of a local branch manager having a close relationship with local businesses and being able to make appropriate lending decisions (possibly over a round of golf or a G&T) are gone. For some the more strategic overview of a regional risk committee makes more sense in the modern age. But while we all welcome that added professionalism, it’s difficult not to feel that something has been lost in translation. Many business owners would welcome a move back to a more responsive and locally aware banking system.

If business has lost trust in banks, what about other advisors? In his inaugural address in June ICAEW president Mark Spofforth made it clear that rebuilding trust in the accountancy profession was a major objective for his year in office.

“It worries me deeply that the profession I joined isn’t held in the same esteem that it was when I started out as a trainee”, he said, before adding that these concerns are shared by other qualified professionals.

On the evidence of this survey, things are already improving. Hitachi found that 43 per cent of respondents trust the advice they were given by accountants, a far higher score than for any other type of advisor. This is excellent news for a profession that has experienced considerable self-doubt in the wake of the financial crisis.

There is a long way to go, but the importance of such a key customer group being happy with the advice they get from accountants is underlined by further research from the technology company Portal. This piece of research was into the importance consumers place on service. It found that 52 per cent reported they would change supplier as a result of poor service. See a name and shame graphic listing some of the worst offenders.

If trust in the accountancy profession is to be built, then chartered accountants in firms of all size and shape will have to continue to provide excellent standards of service and to provide insightful and meaningful advice, especially to business clients. As Spofforth rightly pointed out in his inauguration address: “Trust has to be earned – and once lost it can take years to rebuild. It is fundamental to a well-run economy and to a properly functioning society. And it is a concern, a worry that only we as a profession can address.

"We need to show that we deserve people’s trust and we need to work hard to earn it.”

This article first appeared in economia.

Photograph: Getty Images

Richard Cree is the Editor of Economia.

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Why the Ed Stone continues to haunt Labour

The party has been fined a record £20,000 for undeclared election spending.

It’s one of the great unsolved political mysteries of our time. What really happened to the Ed Stone? Was it smashed in to little tiny pieces or is it still gathering moss in a warehouse? For those of you who have been living under a rock, or in this case a giant tablet, since last year’s general election — the Ed Stone was the much-mocked policy plinth which the former Labour leader, Ed Miliband, promised to place in the rose garden of Downing Street if he won.  

It was unveiled amid much fanfare only to spark a wave of viral humiliation for the beleaguered Miliband. The Mole remembers peering painfully through its paws and trying to ignore the smirks of its fellow rodents. Now, the spectre of the ill-fated tablet has arisen to cause the Labour Party one final humiliation.  

An investigation by the Electoral Commission has revealed that two sums totalling £7,614 were spent on the Ed Stone which were missing from the party’s election return. The report found that in total Labour failed to correctly declare 74 payments worth £123,748 of campaign spending “without a reasonable excuse”. They were also missing 33 separate invoices totalling £34,392.

The commission said Labour’s general secretary, Iain McNicol, who is also its registered treasurer, had committed two election offences and imposed a record £20,000 fine — the biggest since it began operating in 2001.

All of which has left the Labour Party red-faced once more, and the mole feeling slightly nostalgic for the days when politics was simple and the news was full of amusing images of politicians smearing bacon sandwiches across their faces and striking the odd biblical pose in front of a giant stone. Don’t forget, if the Ed Stone was standing proudly in Downing Street today, then Brexit would just be a bad dream.


I'm a mole, innit.