WHEN COMPENSATION IS INADEQUATE

Even at his best, Charles Dickens might have struggled to come up with a plot that features a bank offering to give away £10 million of cash, only to find that those entitled to a share of the spoils are enraged.  But that’s what’s happening at Ulster Bank, part of the Royal Bank of Scotland group. The bank is offering £20 (or €25) to some 500,000 Irish customers to say ‘sorry’ after its IT system went rogue and held customers’ cash hostage for weeks.

“I’m afraid the machine is holding your cash hostage”

As IT meltdowns go, this one was spectacular and slightly sinister. Salaries paid in at one end failed to make the journey to the other, hindering the rightful owners from easily paying for luxuries like food, petrol, mortgages or a bottle of Pinot Noir on a Friday night.  In extreme cases, some were unable to exchange on homes and car sales.

With the IT system failing to co-operate, cashpoints effectively became cashless. The only way affected customers could get access to their cash was to drive into the nearest town, find and pay for a parking spot and do something few of us do very often these days – they walked into a bank branch where they shouted, swore, and finally begged the bank teller.

The bank is now offering £20 to each customer affected for any inconvenience caused.  The inconvenienced are ungrateful and livid. £20, incidentally, is what the bank automatically charges customers who go one penny into an unauthorised overdraft.

If the customers are out of pocket as a direct result of the IT system collapse, and they can produce documentary evidence to back it up, they can make an additional claim for costs.

Speaking about the offer, Jim Brown, Ulster Bank chief executive, rejected claims that the compensation package was “too little too late”. “I’m happy with it. I think it goes far enough,” he said.  Mr Brown will forfeit his annual bonus because of the fiasco, which might explain why he thinks it’s ‘enough’.  The question of why he thinks he’s entitled to an opinion on whether the inconvenienced should be happy was left unanswered.

Would it have mattered if the compensation offer was £30 or £50, or even £100?  I suspect not.  People were weary with bankers’ behaviour long before the IT system turned roguish. This was just another kick in the unmentionables for people who helped bail out the banks, including RBS, only to learn of a litany of misconduct and wrongdoing ever since.

Charitable donations compensate for a multitude of sins

So what’s a bank to do?  Well, the bank could have said that there is simply no way it could compensate its customers adequately for the aggravation they’ve endured, but that in recognition, the bank would donate £10 million across 20 different local charities. This money, the bank could say, would be paid in the name of its loyal but disrupted customers. Not everyone would have been delighted, but only the most hard-hearted would have complained publicly if sick children, malnourished animals, the disabled or the elderly were benefitting directly.

Imagine the press pictures of large, mocked up cheques being handed over to a children’s nurse or an elderly, wheelchair bound lady, with Ulster Bank’s regional managers looking on, magnanimous.

Too cynical?  Perhaps.  But each charity would benefit infinitely more from a £500,000 donation than any individual customer will from an unexpected £20 note. For the bank, a negative position could have been turned into a positive opportunity.

It appears the RBS Group has yet to fully accept that it owes a huge debt to society. Unless the banks acknowledge that their corporate reputations are in the gutter, and that the actions of their bankers put them there, they will have little motivation to think differently.

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BECAUSE THEY CAN

Supplying life’s essentials can provide a steady flow of business, even in a flaccid economy. While the latest widescreen telly or a week in the sun can wait, keeping the lights and heating on, paying the train fare to work or updating your status on Facebook are less discretionary.  None provides the retail therapy lift that a day trip to Selfridges might deliver, but that’s the price that’s due after the country spent too many years confusing ‘available credit’ with ‘disposable income’.

The illusion of growth, or simple inflation?

Identifying growth opportunities in a recession can be like trying to carry steam in a bucket. This is particularly true if you’re a utility-type business.  At this end of the market, there’s seldom a cluster of what the marketing department might call ‘unmet demand’ waiting to be introduced to the life-affirming benefits of your products and services.  Welcome to the joy of delivering revenue growth in a regulated industry.

If you’re an energy or broadband provider, for example, your business can grow in one of two ways: either you lure lots of customers away from a competitor, an expensive strategy with an uncertain outcome, or you jack up your prices.

Raising prices is relatively risk-free when the majority of your customers are handcuffed to long-term contracts with unpleasant penalties if anyone thinks about digging an escape tunnel.  Likewise, if you’re a monopoly rail company that ferries people to and from work, the risk of losing customers because they’re miffed that you’re charging a bit more is equally low.

The problem with jacking up prices for essential services is that the cost increase eventually finds its way into the price of other goods and services.  That is why the price rises announced recently by the rail companies (6%), Scottish and Southern Electricity (9%) and BT (6%) are regressive.  They might create the illusion of revenue growth for the businesses involved, but in reality, all they’re really creating is inflation.   When the cost increases are passed on to the businesses that sell more discretionary stuff, their sales fall further and people lose their jobs.

None of the businesses has been able to explain in simple terms why these price rises are necessary.  That’s because saying ‘because we can’ is not considered a strong message.  The rail companies simply blame a complex pricing formula they’d worked out with the rail regulator, the old “but he said we could.”  Not everyone is aware that, alongside rising rail fares, we contribute a further £4 billion of taxpayer subsidies to the rail companies every year too.

These particular price rises are happening because they’re possible, not because they’re justified.

Combined, it cost £200 million over the last year to fund Ofgem, the Office of the Rail Regulator and Ofcom.  Isn’t it time these regulators, appointed to regulate and look after the interests of consumers, stepped up?  It’s also time the government, tasked with looking after the interests of taxpayers and committed to keeping inflation under control, upped their active oversight of the railways a notch too.

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THE BANK HOLIDAY FORFEIT

There’s something slightly decadent about a bank holiday, extending the traditional weekend recuperation from work into more of a carefree, calming mini-break.  Bank holidays were ushered into British law as an alternative to religious holidays by liberal politician and banker Sir John Lubbock in 1871.  The term suggests we should be grateful for the boundless benevolence of bankers.

Bankers have changed since Lubbock’s day.  No longer upstanding pillars of society, the gallery of rogues that currently inhabit the profession have earned reputations that place them somewhere beneath traffic wardens, ambulance-chasing lawyers and pay-day loan sharks in the hierarchy of social tolerance.

I’m not talking, of course, about the good people that sit behind counters and cash cheques or convert bags of coins into folding money, but the investment bankers who continue to over-generously reward themselves for gambling ineptly, without risk or burden, with someone else’s money.

Let’s re-brand bank holidays as ‘taxpayers holidays’

I’m talking about the ‘heads-I-win, tails-you-lose’ liars, cheats, and thieves who wagered on someone else’s house, or someone else’s pension, and lost spectacularly, only to come crawling back, sweaty palms outstretched to the taxpayer for a bailout and the opportunity to gamble and lose again.  I’m talking about those who, with breath-taking arrogance, packaged up and sold junk as gold and claimed a fat commission on the trades, or who fabricated interest rates to cosset their end-of-term bonuses.

Given the enormous debt that investment bankers owe the societies they look down on with distain, I propose they forfeit any right to time off on a public holiday until such time as their social and moral debts are repaid.  In full.  Those debts, incidentally, should carry an interest rate of 10 percent over and above the Bank of England base rate.

If the Prime Minister had any genuine empathy for the people that put him in power, he would have a new law drawn up and re-brand bank holidays as ‘taxpayer holidays’.

The new law would mandate that investment bankers give up their time on public holidays to maintain the empty shops that litter and mar our high streets.  They would serve in the small businesses that are suffocating for lack of an overdraft and to console those who lost their jobs in the banker-created global recession, and then had their home loans called in.  Cash would not be accepted as an alternative and accountability would be non-transferrable.  Banker’s homes would be at risk if they failed to honour their debts.

The enforced wearing of clothing endorsed with the phrase “I’m repaying my debt to you” would help the guilty become a little more familiar with humility, too.

If bankers felt any shame or accountability for the role they played in messing up the world’s economies, the passing of a law would be unnecessary.

Genuine remorse would see them offer up their time voluntarily in an attempt to rehabilitate their personal and profession’s reputations.  If they cared one iota about the damage and despair they’ve created or the lives they’re ruined, they’d be making more of an effort to acknowledge their dues and seek public forgiveness.

Unless investment bankers genuinely accept publicly the damage caused by their greed and incompetence, they are destined to repeat it.  That more of them aren’t in prison shames the criminal justice systems charged with maintaining fairness and decency in our societies.

I hope you’re enjoying your long weekend and the bonus day off.  Just remember: it wasn’t given to you by a banker.

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