This time last year, banking was the industry that Britain most loved to hate. This year, that doubtful distinction is probably enjoyed by the railways. But while banks may be getting fewer angry headlines, have they - or anyone else - actually done much to clean up their act?
Don Cruickshank mounted a formal inquiry into banking at the request of the Treasury in 1998. Initially supposed to take mere months, Cruickshank's deliberations eventually gave birth to a 350-page analysis in March 2000. One of its conclusions, hotly disputed by the banks, was that the money transfer system was slow and inefficient and lacked real competition.
Cruickshank proposed the setting up of PayCom - an independent payment systems regulator charged with imposing competition on a reluctant industry. A year later, the government gave the Office of Fair Trading (OFT) new powers promoting effective competition in payments systems for the benefit of consumers - apparently the plain, if not the poor, man's PayCom. In August, the Treasury revised its proposals for the OFT to be regulator of the systems by which debit card, credit card, cheque and other payments are made, as soon as parliamentary time permits.
In November 2000, the government had set up the Consumer Codes Review Group, chaired by DeAnne Julius, to conduct an independent inquiry into self-regulatory codes of practice in the banking services industry. The group's report, published in July 2001, called for measures to make account switching easier, to improve information provided to customers, and to strengthen processes for producing and enforcing codes. Responses to that report were invited by the end of last month.
A Treasury committee also investigated "Banking and the Consumer", the government's last response to the committee's report that was published in July.
Melanie Johnson MP endorsed the committee's finding that moving accounts between banks was too difficult and that insufficient action had been taken to improve this situation; that the Banking Code should be better enforced; and that differing interest rates between old and new products were unacceptable. With the second anniversary of the publication of the Cruickshank report approaching, these measures still await the parliamentary time required to empower the OFT.
In March 2001, the Competition Commission published provisional conclusions to an ongoing inquiry. It pointed to a number of complex monopoly situations involving services provided by clearing banks to small and medium-sized enterprises. The commission ruled in July that the proposed Lloyds TSB takeover of Abbey National could not proceed.
Johnson highlighted in her remarks to the Treasury committee the remarkable public reaction last year to proposals that ATM withdrawals should be subject to charges. She suggested that improvements in services could best be achieved by better public access to information. Customers could then use their buying power to influence the content and cost of banking products.
Despite intensive local campaigns, however, this tactic has not worked to preserve threatened high street branches, and the success in fending off ATM surcharges possibly owed more to disputes within the industry, with some players threatening legal action against the rest if charges were applied.
With the pressure of monitoring and responding to all this activity, it is perhaps not surprising that bankers have otherwise maintained a low profile. This is not to say that the marketing machines of the various banks have been idle. Advertising continues on all fronts with, notably, Royal Bank of Scotland/Nat West still promoting heavily the idea that there is "a better way" than charging for visits from a manager, withdrawing borrowing facilities at short notice and converting branches into trendy wine bars.
Nearly two years after the publication of the Cruickshank report, and almost four since its commission, we in the real world are still waiting for stronger consumer protection to bite. No new legislation has been drawn up, no new regulator enthroned, nothing exists or is planned to rival US consumer protections, which deal with everything from dormant and unclaimed funds to fair debt collection.
Consumer agencies still report that spiralling debt is a major issue, and that despite specific provision in the Banking Code for sympathetic treatment of those in financial difficulty, there is so far no industry agreement on the precise definition of those terms. (This also from an industry that had to define the precise meaning of the term "instant access".)
Too many customers complain that the result of reporting financial problems is simply more serious financial problems as the bank calls in chequebooks, cheque cards and loans. And, as far as many are concerned, the headlong rush towards a call-centre culture has broken the connection between customer and institution for ever.
Call-centre technology now allows incoming callers to be identified by Caller ID. The appropriate records and any notes or instructions as to potential debts, sales or complaints can be displayed on screen by the time the caller has said: "Can you help me?"
Agents dealing with calls, recorded or monitored to ensure that a corporate script is not varied, will be able to push the customer toward any desired resolution. Customers, without the benefit of a script or special expertise, may easily be manipulated against their interests.
The needs of callers, for explanations, information or simple service, have now been overtaken by the new organisational icon of "Customer Relations Management". To customers, this may seem like a good thing. But it seems a powerfully misnamed (or misused) discipline which, while implying that companies listen to and provide better service for customers, actually means that customers are managed into the maximum spend with minimum cost.
One practical example of this trend has been the rise and rise of internet banking. Although offered as a major consumer benefit, internet banking can be an institutional money- machine. If the unit cost of dealing with branch customers is measured in £10 notes, the comparable measure of call-centre operations is £1 coins and of internet services is decimal points of 1p.
Institutions naturally favour sales channels with the lowest overhead, but many customers are less keen on doing all the work and taking the responsibility for completing back- office tasks. Experience in the US suggest that internet-only banks will lose out to clicks-and-mortar competitors who still have high street service outlets to complement their internet service.
As further indication of the fragility of internet-only banking and the need for additional protection for customers banking with UK outlets of foreign institutions, the internet bank first-e closed its doors in the UK from 3 October. Banque d'Escompte, which operated first-e in the UK, has decided to concentrate on its core French market. Customers have been e-mailed either to close their accounts or to transfer funds into an investment account with a UK subsidiary of Direkt Anlage bank. Accounts and balances of customers who have not yet transferred or made alternative arrangements are being held by Banque d'Escompte in Paris. These can be claimed at any point, but no interest will be paid in the meantime and fees will be payable.
It appears that while banking remains under a magnifying glass, customers are so far no better off in real-world service, cost or protection than four years ago.
Stuart Cliffe is chief executive of the National Association of Bank + Insurance Customers, a non-profit watchdog association