Welcome to Fiach’s blog which explores the funny and not so funny issues of managing money.
Fiach is head of marketing for the credit unions in the My Community Bank network and as the Guardian newspaper put it ‘he’s not a man given to mincing his words’.
Our aim in publishing Fiach’s blog, other than shutting him up in the office, is to give our members a starting point for conversations about all things money related. There are lots of useful personal finance bloggers out there already so we understand that Fiach intends to take an offbeat and sometimes downright irreverent approach.
If this blog provokes, amuses, or irritates, please have your say on our Facebook page.
A couple of years ago my good friend Mohsin Mehdi (he has since become Chairman of My Community Bank) asked me for some help getting what he called ‘challenger bank’ off the ground. The conversation ran something like this.
Me: ‘What’s a challenger bank?’
Mohsin: We want to beat the big banks and personal finance houses by changing the rules for the game.
Me: Sounds great. What do you need?
Mohsin: We need to build and community oriented financial services business which will bring ethics and old fashioned fair playback into banking.
Me: So if we end up with a bank which is all about community savings, community borrowing, ethical banking, and community prosperity, and only offer highly competitive savings plans and fair loans to individuals and small businesses. Will that do the job?
Mohsin: It will be a very good start.
So off we went and made our start. We have begun our journey in and if you are reading this you are probably one of our first members. So welcome.
What is a Credit Union?
I was asked many times at our launch why we chose to build My Community Bank as a Credit Union. When I explained I realised that I needed to tell people what a Credit Union is.
At its simplest a Credit Union is a financial cooperative owned and democratically controlled by its members. The idea has its philosophical roots in community self help. Until recently UK Credit Union rules were very restricted in terms of the products they could offer. All of that changed in 2012 and Credit Unions are now allowed to offer a full range of personal financial services including fixed interest rates on savings. This mirrors what Credit Unions can do in other countries such as the USA where almost half of the total market for personal banking is controlled by Credit Unions.
Our research told us that many people have lost trust in traditional banks and like the idea of having a stake in the bank that they do business with. The expression ‘ethical banking’ came up a lot. This past year we have seen a number of the old school banks attempt to re-brand themselves a community based banks. As my kids would say ‘Yeah right!’
“You can’t be serious!!”
I found myself doing this awful impersonation of tennis star John McEnroe when my daughter reported that over the past year (the first in her life living away from home and looking after her own money) that her bank had charged her a total of £250 pounds in unauthorised overdraft fees. The three overdrafts in question were £50, £65 and £75 each for less than five days.
How could this happen?
My daughter has had this back account since she was 14 yrs. old and didn’t understand that when she turned 18 the bank would ‘allow’ but not ‘authorise’ her to withdraw cash from an ATM even though she had no money in her account. Prior to her turning 18, ATMs simply refused to dispense cash if there was no money in her account.
I don’t know about you but I think that £200 is an awful lot of money to pay to be thought the difference between ‘allowed’ and ‘authorised’. Well pro tennis n0w has Hawkeye to resolve disputed line calls. When will the banks be subject to similar scrutiny?
Incidentally when we complained to my daughter’s bank they refunded half the fees and switched her to a student account which has no fees.
What lessons, other than linguistic, has my daughter learned from this experience?
- Don’t trust banks to look out for you
- When banks trip you up make a big fuss
- Join a Credit Union.
And what about managing her money? Well she’s a lot better at doing that now.