Examination of Witnesses (Questions 360-379)
MR JOHN
VARLEY, SIR
FRED GOODWIN,
MR SHANE
FLYNN AND
MR MICHAEL
GEOGHEGAN
26 OCTOBER 2004
Q360 Mr Beard: The APR strength is irrelevant,
you have got nine different ways of calculating interest. Nine
different ways that can differ by as much as 50% between one and
another. This is the source of your profits, it is obscure, nobody
understands it, it is not clear in the summary box, even the ones
you produce now and yet you are quibbling about it. Surely it
is something you should say "it is a fair cop, Guv, we will
go away and try and do better next time".
Sir Fred Goodwin: That is what
we did last time and that is what we have done.
Q361 Chairman: You have written to the
Committee as well, Sir Fred, and I know Mr Plaskitt is going to
be on to you on that. Let me finalise in a yes/no answer from
all of you: if you have got a situation where you have the same
purchase on the same date with two different cards which have
the same APR and then the full amount is paid back on the same
date yet the two cards charge different amounts of money, the
consumer does not know, is that fair, Mr Geoghegan?
Mr Geoghegan: As you have already
indicated, HSBC . . .
Q362 Chairman: I have asked you that
question, is that fair?
Mr Geoghegan: It could be.
Q363 Chairman: That is fair?
Mr Geoghegan: The consumer would
know. For HSBC's customers . . .
Q364 Chairman: If the consumer does not
know, is it fair? That is the question.
Mr Geoghegan: HSBC's customers
would know.
Q365 Chairman: That situation which exists
now, is that situation fair? There is the same purchase on the
same date, two different cards, same APR, full amount paid back
on the same date, two cards charge different interest rates, is
it fair, yes or no?
Mr Geoghegan: No.
Q366 Chairman: No. Mr Varley, is it fair?
Mr Varley: I think the terms and
conditions . . .
Q367 Chairman: Is it fair? I am only
giving you this question, do not go on to terms and conditions.
This situation, is that fair?
Mr Varley: I accept, Chairman
. . .
Q368 Chairman: It is not fair then?
Mr Varley: I accept that the industry
could do more to achieve . . .
Q369 Chairman: Exactly, so it is not
fair?
Mr Varley: I accept that the industry
could do more to achieve . . .
Q370 Chairman: It is not fair, that situation,
is it?
Mr Varley: I have to ask myself
whether . . .
Q371 Chairman: I will leave it down to
you, is that fair?
Mr Varley: Chairman, I cannot
control the industry unilaterally.
Q372 Chairman: I am asking you as an
individual, is that fair? I do not think it is fair, is it? If
this information is not known, it is not fair.
Sir Fred Goodwin: I do not think
it is helpful, no.
Q373 Chairman: Is it fair, Mr Flynn?
Mr Flynn: I do not think so. [1]
Q374 Chairman: No. Mr Varley, we will
come back. We do not want the scenario of last time, Mr Varley,
just give us a simple answer. Quick. Do not put yourself into
a hole, your predecessor did. Is it fair?
Mr Varley: Thank you for reminding
me of that, Chairman.
Q375 Chairman: Is it fair?
Mr Varley: We can improve.
Chairman: Exactly, so it is not fair.
Thank you very much.
Q376 Mr Plaskitt: Can I just come to
the same point in a slightly different way. I am going to engage
two of you on this. Mr Geoghegan, the HSBC Platinum 80 card has
an APR of 17.6% and offers up to 51 days' interest free and, Sir
Fred, your RBS card 17.9% but 59 days' interest free. Suppose
I have got your two cards in front of me, just those two, and
my plan is to make £2,000 worth of purchases over a year
and then repay all of that over a further year, which is the best
deal? Which is the best card for me to have?
Sir Fred Goodwin: I need to sit
down and work it out. The information would be in the summary
box to allow you to understand.
Q377 Mr Plaskitt: From the scenario I
have given you, can you convince me that your card is the best
one for me to go for?
Sir Fred Goodwin: Not off the
cuff I could not but I could sit down and come back. I need to
sit down and look at the terms.
Q378 Mr Plaskitt: Mr Geoghegan, can you
convince me that your card is the best one to go for?
Mr Geoghegan: If I had the two
summary boxes I would be able to see it. I will just point out,
firstly the Platinum card of HSBC we do not actually sell it any
more. Secondly, as I mentioned before, we have our interest free
period of 56 days and then on top of that we do not make any difference
between cash payments or normal purchases or transfers. I feel
comfortable that HSBC's card is the card to buy.
Q379 Mr Plaskitt: Both of you said you
could do the calculation to work out which is the best offer.
What is the calculation you would do, Sir Fred?
Sir Fred Goodwin: You would need
to refresh my mind of what you said this particular scenario was,
whether it was a cash purchase or whether it was—
1 Note from Witness: Given that particular situation
and the context provided by Mr Varley. Back
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