Examination of Witnesses (Questions 420-439)
MR JOHN
VARLEY, SIR
FRED GOODWIN,
MR SHANE
FLYNN AND
MR MICHAEL
GEOGHEGAN
26 OCTOBER 2004
Q420 Norman Lamb: You do not increase
your interest rate?
Mr Geoghegan: No.
Q421 Norman Lamb: What is the justification
in you two increasing your interest rate and charging up to £90
a month for perhaps a small excess over the overdraft limit?
Mr Varley: On your small excess
point, we have a buffer of £25 to protect customers against
the very incident you refer to. In other words, if by mistake
they go over limit we create a buffer to ensure that they are
protected against that. There are two other points I would make.
It is axiomatic that the terms and conditions that govern these
issues have to be transparent and I believe in our case they are
transparent. I think it is also axiomatic that customers understand
that Barclays is expected to keep its side of the bargain and
they are expected to keep theirs. I think customers understand
that well.
Q422 Norman Lamb: Where do you disclose
those charges to customers?
Mr Varley: In written terms and
conditions, on the internet and in the branch.
Q423 Norman Lamb: Do you have a summary
box?
Mr Varley: In a telephone centre.
No, we do not have a summary box as such.
Q424 Norman Lamb: Would you consider
that?
Mr Varley: Yes.
Q425 Norman Lamb: We are moving towards
greater transparency on credit cards. You all sign up to the idea
of exactly the same principles applying to credit cards?
Mr Varley: It is a fair challenge.
The reservation I would have is we should not assume that precisely
the same summary box should apply to every product in the financial
services industry. It would be wrong to do that.
Q426 Norman Lamb: But it is clarity,
is it not?
Mr Varley: The principle of clarity
and transparency is something that we all honour. In our case
in any event, we are looking at whether we should use summary
box structures for other products. There is another thing that
customers can do. Again, I think it is part of understanding their
part of the bargain. They can create with us the capacity for
an authorised overdraft. That comes at no cost to them. What they
are doing thereby is saying, "I may go overdrawn. I need
to agree with my bank up front what happens if I do" and
that seems to me to be part of the grown up relationship that
we have. It is a relationship based on a contract that says each
side has to keep its part of the bargain.
Q427 Norman Lamb: Can I put to you an
example given by the Consumers' Association? They write, "One
of our members, a Barclays customer, realised he was about to
go overdrawn and immediately transferred an amount out of his
Halifax savings account. However, these funds did not clear for
three days." This is an issue in itself which there has been
quite a lot of criticism of. "As a result, he became overdrawn
for a sum of £318 for three days, with the bank billing him
£75 for charges." Is that fair?
Mr Varley: If the facts of the
case—I do not know the specific case—are in accordance
with our terms and conditions, then I believe it is fair, yes.
Q428 Norman Lamb: Given that it has taken
you that time to clear—?
Mr Varley: Understand that there
is a community of interest between us, the provider, and the customer.
If in exceptional circumstances—I think the one you are
describing is exceptional—if the customer is in difficulty,
we are available to work on rescheduling. That is absolutely in
his interests and in ours. We have dedicated teams of experts
who are available at the end of a telephone or in a branch to
do exactly that, to help customers who get into difficulty.
Q429 Norman Lamb: Is it possible for
you to clear sums quicker than is currently the case?
Mr Varley: In the case of Barclays,
five years ago we introduced something which we call instant banking.
For the overwhelming majority of our personal customers, that
means that they can get value on cheques before we get value.
They present their cheques and we will allow them to draw against
those cheques on the same day—in other words, before we
have got value through the system. For most of our personal customers,
the issue that you refer to does not arise.
Q430 Norman Lamb: But it does arise with
some of them.
Mr Varley: It is very rare. We
have tried to put in place a structure that enables the overwhelming
majority of customers to be able to clear against uncleared cheques
immediately.
Q431 Norman Lamb: Are any of you planning
to increase charges? I was asking questions to Lloyds last week
and they did not mention that they were just about to increase
their charges for exceeding the overdraft limit. Are any increased
charges on the way?
Sir Fred Goodwin: I would not
be about to reveal that in public and certainly not in front of
these guys. I do not think there is anything I am sitting on top
of in the context of—
Q432 John Mann: Mr Flynn, some of your
competitors are very concerned that if you all shared full data
you would use it for predatory marketing. What safeguards would
need to be in place to prevent that happening?
Mr Flynn: Data sharing is something
that all of us talked a little bit about when we sat down. MBNA's
position on data sharing, I suppose, has its genesis with our
arrival here in 1993. From the start, MBNA shared information
on all products and we have done so since. The approach that we
take is along the lines of the Fair Credit Reporting Act from
the United States which was established in the later sixties/early
seventies. At that time, the bureau system that is used in the
United States took hold. That system is very well developed and
is the most developed in the world at this stage. The range of
information that is available to a lender is substantial. I think
it is a fair point of criticism from competitors of ours that
they say information could be used in a predatory sense. I have
heard that. I believe however that there are protections in place
today and although I cannot speak about those adequately, not
being a lawyer, we believe that the ability of a lender to use
that information for marketing purposes is not there. The data
protection laws in the UK prevent us from using information like
that for marketing. That is our interpretation.
Q433 John Mann: Your interpretation is
that there would be a safeguard against predatory marketing?
Mr Flynn: That is our interpretation.
Q434 John Mann: Gentlemen, do you agree
with that?
Sir Fred Goodwin: As of quite
recently, there is an APACS working group on data sharing which
has relatively recently arrived at a position whereby, with agreement
amongst the parties, there would be prevention on the data being
used for marketing of any sort, whether it is predatory or not.
Q435 John Mann: Predatory marketing is
no longer an issue?
Sir Fred Goodwin: Not provided
the agreement remains in force.
Q436 John Mann: The Information Commissioner
suggests to this Committee in writing that there are no problems
in terms of you getting customer consent to share full information.
Do you agree with Mr Richard Thomas?
Mr Flynn: In our situation it
may be a little easier than with some of our competitors in that,
since 1993, we have had that agreement from our customers.
Q437 John Mann: He is talking about historic
as well.
Sir Fred Goodwin: I think the
issue is a pragmatic one. By and large, from about 1998 or 1999
onwards, the terms and conditions under which we have done business—and
I suspect everyone else—enable us to share the data with
reference agencies in the manner you are referring to. Prior to
that, the terms and conditions of the products which were sold
did not include appropriate wording. We would need our customers'
express consent, not, "If you do not reply in three days
we will take it your consent" but actual consent. The concern
is a practical one of trying to get that consent for people who
signed up with us pre-1998/99, depending on when people changed
their terms and conditions.
Q438 John Mann: I have just received
a requirement to consent with the new PIN system. My card predates
1999. What is there to stop you doing that?
Sir Fred Goodwin: Cards are not
particularly the problem. I think the issue is more in current
accounts and so on. We share positive and negative data on cards.
I think most people do.
Q439 John Mann: What is the problem of
all of you making it a condition of business?
Sir Fred Goodwin: We cannot retrospectively
do that for someone. The nature of the data protection regulations
is that we cannot go back and say to customers, "Consent
to this and, by the way, if we do not hear from you, your consent
will be deemed to be there." If we can get over this hurdle,
we are happy to share the data. My understanding was that APACS
were hoping that there might be some dispensation from the Commissioner
which has been given for negative data. I do not think anybody
is trying to be difficult about this. My reading of his letter
was—
| 
