Banks: Vulnerable Customers

Lord Soley Excerpts

Monday 21st December 2015 Lords Chamber

[Lord Soley (Lab)]

My Lords, my comments will follow those of my noble friend who has just sat down and of my noble friend Lady Hayter. I have been concerned for some time about the poor standard of service to many people from the banks. I want to say first of all that I know that improvements are in the pipeline; my noble friend has just referred to some of them, and I am aware of the Practitioners’ Pack that has been issued by the Financial Conduct Authority—all of which are welcome steps. I have also seen one or two improvements on banking websites just recently.

I will focus my remarks on one area which is a growing problem. It is the issue of power of attorney for vulnerable people. I speak partly from my own experience of having to manage the finances of a relative for whom I have power of attorney. The experience is not a good one and is very difficult to deal with. A very important point here links into what some of the things the Financial Conduct Authority needs to look at as well, which is the relationship between the banks and some of the other financial institutions which persuade people to part with their money, often by direct debit and other means, to pay for services of one type or another.

I will start simply with the example which brought it to my attention—that of my own relative. When I discussed it with other Age Concern-type groups they told me that this was fairly common. When I took power of attorney I started looking into what banks, including the bank I was dealing with for my relative, had an easily searchable site for power of attorney. Generally, it was bad news. Barclays has just improved very considerably, and now, if you type “power of attorney” into the search engine you get a number of options. When I typed it into the NatWest website I got no answer, and no answer from the frequently answered questions either. When I typed it into HSBC, which I have never rated very highly for any of these services, the site just told me what power of attorney was—a power that is given to someone else—but did not tell me what to do about it or how to use it, or anything like that.

The worst experience was with Barclaycard. Unfortunately, I had taken the card myself, but it took me about two months to close it down. First of all I went to Barclays Bank, as most people would do, only to be told, “Barclays Bank is different from Barclaycard”. I rang Barclaycard and had a couple of phone conversations, during one of which I was told to go to Barclays Bank. I therefore went back and told the people there, and again they said, “No, we can’t do it here”, and I said, “Well, I was told on the phone that you can”. The response was, “No, we can’t”. I made a major effort to close down the card. I got through to a very helpful person on the phone and eventually the situation was sorted out. But the fact that there is nothing on the website about power of attorney is bad. When you search through the terms on a bank’s website, you should be able to type in “power of attorney” and get the information you need.

On the Barclaycard website, I found my way to a part of the site which said, “We help vulnerable people”. There was a picture of an elderly lady called Alice whom the company was helping, but there was absolutely nothing about power of attorney for her; it just said, “We will help Alice if you phone this number”. It said that it could not give any details about a particular person but that, if you told the company who it was, it would look into it. It is so ill thought through that it is almost impossible to imagine anything worse.

People’s experiences of dealing with banks vary immensely. My experience with Barclaycard was particularly bad but others which I have talked to have been quite good. It depends very much on whom you get to speak to. But the evidence that I have picked up generally both from my own experience and from talking to other people is that, by and large, many of the staff do not know what to do at first and often have to refer the matter to someone else. With the increase in the incidence of dementia and related conditions, power of attorney is now so common that we ought to see it as a primary factor.

Similarly, companies should provide an address to write to. I am pretty familiar with the internet and computers—I can use them—but we should bear in mind the people who cannot. What would someone of my age who may not be familiar with the internet and computers have done in the situation that I have described? They would have gone to the bank but I am not sure how that would have worked out, and in many cases there is no address to write to.

The other thing that I was particularly struck by—I want to draw this to the attention not only of the Minister but of the Financial Conduct Authority—was the linkage between banks and financial organisations. On my relative’s account there was a regular payment for a freezer. It was obviously an insurance payment, although it did not say so sufficiently clearly on the bank details for me to find out what it was for. Eventually I found out that the payment was for insurance on a freezer and it had been going on for at least five years as far as I could make out, although I am still waiting to hear the details. I stopped the direct debit as there was no point in making the payment—I had moved my relative out and was selling the house.

However, about two months later I looked at my relative’s account again and found that the direct debit had restarted. When I visited the house, which at that time was empty as I waited to sell it, I came across an unopened letter. It said:

“Your … Fridge Freezer Protection Plan is due to expire on”,

14 July,

“but there’s no need to worry—we’ll renew it automatically”.

I wrote to the company, Domestic & General, and got a reply in which it apologised, saying that it regarded that seriously and did not think that it should have happened. In fairness, I must give it more time to deal with the matter, but it said that it does not think that a direct debit should be restarted without direct permission. I do not think that it should either. The problem is that I really do not know whether the fault lies with the insurance company or with the bank. What I do know, with great clarity, is that if I stop a direct debit and the bank agrees to stop it, I do not expect it to start again without my permission. I suspect that this has happened in other cases. People have said to me, “Oh yes, they can restart it automatically”. I suspect that this is partly down to a payment being restarted at the end of a term, but in the middle of a term it is not justified.

I have come across a number of situations of this type. Another one concerned the broadcaster Sky. My relative was paying £80 a month for the full service, and this was someone who had never watched sport in her life. She had the full package and the payments went on, although eventually I managed to stop them. Therefore, there is a very real problem here for vulnerable people and for the person who has power of attorney. I can find my way through the problem but an awful lot of people will not.

Finally, banks have to get a lot better at dealing with things such as direct debits. The one that I bank with mostly is the Co-operative Bank and it is often very hard to work out the name of the organisations that my direct debits are going to. They often have coded names, which is fine if you can remember what they are. In my case, I have about 30 direct debits. I sometimes wonder what they are for and have to look them up. Every direct debit should be listed with the name of the organisation that it is going to, and it should be a proper name and not one that leads you off down the highways and byways of the internet. It must be recognisable.

So there is a gap here between banks and financial institutions generally and other organisations that take money off people through regular direct debits without any real clarity. I am very pleased that a Practitioners’ Pack is now available from the Financial Conduct Authority, and I am very pleased that there are other changes in the pipeline. It is obviously starting out on a journey but it has a very long way to go, because the standard of service is very poor. I could also talk about the charity issue to which my noble friend Lord Cashman referred. I started a not-for-profit company but HSBC seemed more interested in getting it closed down than in helping me to manage in a difficult area.

But my key point is about vulnerable people. That is what the debate is about and I welcome it. The power of attorney issue is becoming increasingly important. If I were to make a simple plea to every financial institution and insurance company, it would be, “Make sure that you have ‘power of attorney’ in your search engine so that people can link into it. Then start thinking about what you do for the older person who is not familiar with using computers”. If an older person has power of attorney for a wife or a husband, for example, how on earth do they manage? It is not like the old days when you popped down the road to see your bank manager. There should be one person in every bank to whom you are referred if you have problems of that type.