Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 320 - 339)



  320. So there has not been proper competition in UK banking.
  (Mr Crosby) I think competition is intensifying all the time. If I may go back to the point I made, the issue is the sense customers have of inertia, how difficult it is to move, and, in so many products, that is what finally breaks down any barriers to competition and that is why I would focus on the new automated transfer system which I think will make that change.

Mr Ruffley

  321. Mr Goodwin, what do you pay on your standard NatWest Current Plus account in terms of gross interest?
  (Mr Goodwin) I believe that would be 0.1 per cent.

  322. What does the Halifax Bank pay gross?
  (Mr Goodwin) I have no idea. There is an advertising campaign at the moment—

  323. You have no idea?
  (Mr Goodwin) It depends which accounts we are comparing. Halifax are offering a rate higher than that for an account with particular conditions—

  324. What is the highest that you are aware of?
  (Mr Goodwin) If I could finish, they are offering it on an account with particular conditions surrounding the operation of the account. Mr Crosby is obviously far better placed than I am to go through the ins and outs of the terms and conditions of his account but it is not universally available to everyone. There are requirements about minimum monthly transaction flows. I do not know that a comparison of what we would offer on the Current Plus account, which is what you asked me about, with that would necessarily be the relevant comparison. Looking at how customers operate their accounts, there are savings accounts available to customers, there are sweeps available to automatically take balances out of customer accounts and—

  325. I understand that. What is the nearest comparable Halifax bank current account to Current Plus?
  (Mr Goodwin) I personally do not know.

  326. You do not know?
  (Mr Goodwin) No because I am not directly responsible for setting the detailed prices.

  327. No, but you should know what the competition is doing.
  (Mr Goodwin) I do know what the competition is doing in the sense that we are out in the marketplace—

  328. You are obviously not aware of what the competition is doing because you cannot compare like with like.
  (Mr Goodwin) I think the fact that I do not know every single product pricing in the Halifax's product range is correct, but that does not necessarily indicate that I do not know what the market is doing.

  329. Let us try again. Do you think there is any comparable current account offered by Intelligent Finance?
  (Mr Goodwin) It would not be comparable because it is a direct only offering. Our current accounts are operated through a branch network, so I would not compare our pricing on the Current Plus account that you mentioned with Intelligent Finance.

  330. So you do not think the rate of interest paid by Intelligent finance is comparable to any product you offer because of the differences in branch network?
  (Mr Goodwin) It would be comparable to some of the products that we offer. We have Internet only offerings also but again I am not familiar with the detailed pricing of it. The point I am making to you is that our Current Plus account, which is what you mentioned in NatWest, is not comparable with it.

  331. I think anyone listening to this will find your answers deeply unsatisfactory because you are not coughing to the fact that, on current accounts, Intelligent Finance, as a for instance, or someone at Smile can actually get over 40 times more interest paid to them on their current account than you offer at 0.1 per cent gross.
  (Mr Goodwin) I do not accept that as a valid comparison for the reasons that I have outlined to you. If you would like a comparison of the rates of all the products that we offer versus the rates of those that other businesses offer together with the terms and conditions—

  332. You are inviting us to believe that there is no comparison between the amount of interest paid by the new entrants and your own bank and NatWest.
  (Mr Goodwin) What I am saying to you, if you would allow me to answer the question, is that there is a comparison—

  333. If you are ever going to answer it.
  (Mr Goodwin) I do feel it is important that I get the opportunity to answer the question properly.

  334. Let us move on.
  (Mr Goodwin) The question which you asked has an element of content product delivery channel which needs to be taken into account in the comparison.

  335. Like the jargon! Let us move on.
  (Mr Goodwin) If you want to compare different accounts, then we can compare—

  336. Shall we move on because this jargon is not getting anywhere. You are not prepared to accept this comparison.
  (Mr Goodwin) This is not jargon.

  337. Let us move on, Mr Goodwin.
  (Mr Goodwin) I do feel it is important that I get the opportunity to answer the question.


  338. He must be allowed to answer the question.
  (Mr Goodwin) This is not jargon. This is a very important issue as to what can be compared with what in a competitive marketplace and it is also the essence of a competitive marketplace that not all of the players need offer the same pricing. There are different customer propositions out there which have different prices and we are quite content. We are growing our business and we are growing our business in a marketplace and in an environment where there is competition and transparency around what is offered. Thirty per cent of our personal current account customers elect to pay for their current account; they pay to have a current account because they prefer the proposition. I think it is important that customers are given that choice, not simply led into overly simplistic comparisons between one type of account and in any other way on another type of account.

Mr Ruffley

  339. It is banal of you to say that you offer different products from other competitors, of course you do and you made that point really rather well. However, you are not prepared to say to this Committee because you do not know what the nearest equivalent to your Current Plus account is, what you would get if you had a similar account with one of the new entrants.
  (Mr Goodwin) I am happy to find out for you, if you would like that.

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