Examination of Witnesses (Questions 240-254)
MR JOHN
HARDY AND
MR HOWARD
AIKEN
21 DECEMBER 2004
Q240 Chairman: What we did with the banks
is we asked them to put minimum repayment scenarios on their accounts
and Barclays and Lloyds have moved on that and that is a really
big advance for consumers because if they are making a minimum
repayment it could take 25 or 30 years or maybe forever if they
are not paying the capital off. Once that is there in front of
everyone saying "this will take you x amount of years to
pay off" it focuses the mind. It is the same here. If we
had that transparency in a minimum payment that would focus people's
minds, the same as for the petrol station.
Mr Aiken: I think it is impossible
for the ATM to know what the minimum payment is because in the
event—
Q241 Chairman: But Mr Hardy is it not
agreeing with you, he is saying it could be done, you could have
a minimum payment.
Mr Aiken: I think the point there
is if it is a charge card or a credit card the ATM owner cannot
impose a surcharge and the issuing bank has to decide how much
it is going to charge their customer. The ATM owner cannot possibly
know up-front before they got the message back from the issuer
the amount of that charge.
Q242 Chairman: There should be a code
here surely? If you are making investigations every year on machines,
in answer to James's question, then banks could provide information
that this will be the charge over the next year and that can be
incorporated and you could have the minimum charge.
Mr Hardy: It depends on the transaction.
If it is a debit card—
Q243 Chairman: Let me tell you that what
we want is for you to look at that very seriously and write back
to us on it because that is a fundamental aspect of our inquiry
and we will be looking at that in great detail. If you could do
a memo for us on that, that would be terrific. On the issue of
transparency I note the Building Societies Association are still
saying that it is vague, bland and non-specific so those are people
within the industry that are saying that, and I think there is
something to be taken up there. If I can get a summing up with
you before you leave, it is the case that consumers still cannot
shop around at the moment because they do not know what charge
will be levied until they have almost completed the transaction.
That is the situation?
Mr Aiken: But, as I say, from
June before they put the card in the machine there will be something
on the screen which tells them what the charge is.[3]
Q244 Chairman: Even if there are four
machines at each corner of this room, after June you would still
have to go to each machine—
Mr Aiken: —And you have
to look at the screen of each machine.
Q245 Chairman: Exactly, so therefore
they cannot stand in the middle of the room and say A, B, C or
D. They cannot make that single decision. They have got to go
to all these machines. Is that correct?
Mr Aiken: Yes.
Q246 Chairman: They have still got to
do that, right. Regarding the points that my colleagues brought
up about financial inclusion, it would indicate that more research
needs to be carried out into access to free machines, particularly
in poorer areas. Is there any help that you can give us on that,
particularly producing a map of where the machines are? Could
you do that?
Mr Hardy: We can do that.
Mr Aiken: I think you need to
identify to us what are the postcodes of the poor areas.
Q247 Chairman: But you could do that?
Mr Aiken: Indeed.
Q248 Chairman: It would be good if you
could do that. Regarding the Code of Practice, the current Code
of Practice is inadequate and we welcome the review announced
today on that. If you could keep in touch with us on that area
I think that would be very helpful. Regarding the Banking Code
Standards Board and law enforcement, I have described it as ad
hoc. Is there a way you could discuss that with the Banking
Code Standards Board to produce a more systematic approach to
that?
Mr Aiken: We already have done.
Q249 Chairman: My friend on the M40 in
Warwick does not think that because he brought that to my personal
attention. So we are looking for a systematic approach, not an
ad hoc approach.
Mr Aiken: That is right and we
are going to do these mystery shopper exercises.
Q250 Chairman: It is not just mystery
shoppers because the mystery shopper takes place the week before
Christmas and then everybody forgets that in the new year. It
is the systematic approach that we are looking at.
Mr Aiken: If we are talking about
signage on individual machines you have to visit the individual
machine.
Q251 Chairman: I will give you that challenge
as to how systematic you can be and you can come back to us on
that particular issue. Regarding the selling off, the point was
made that banks are selling off. Is there what we term a "double"
incentive to sell off for banks because if they have their free
cash machines in their bank branches or at Victoria Station then
customers come along and the banks pays LINK the 31 pence or whatever—
Mr Aiken: No, it does not pay
LINK. The bank that issued the card will pay LINK on average .8
of a penny. The interchange fee goes to the ATM owner.
Q252 Chairman: They are paying some amount
of money.
Mr Hardy: To the ATM owner.
Q253 Chairman: But if the bank or the
company sells to an IAD, then if any customer comes to that machine
later on there is no charge at all for the bank?
Mr Hardy: As long as there are
no surcharges because some independents do have machines which
are free.
Q254 Chairman: But it does not cost the
bank for every transaction because it is then the responsibility
of the IAD. Is that correct?
Mr Hardy: It does not pay any
interchange fee.
Chairman: That is an issue that we would
like to look at. Do my colleagues have anything else? Can I thank
you for your time this morning. It has been very helpful indeed
and we look forward to the submissions that you are going to make.
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