I am now convinced the Big Banks have taken leave of their senses (I live in UK) regarding the relationship they have (or had, more of that later) with you and I, joe soap, the ordinary person going about his or her life before the grim reaper moves us on. At the end of the day, they are a business not a charity, and are there to satisfy their shareholders - what a surprise, but fair enough - and I for one wholly understand that, and support the dynamics and drivers associated with that. Yep, there is a but coming.
But.
There is a limit. I just put the phone down after several sessions with many people, ending with the Senior Manager Credit Control of one of the Big Four UK Banks. To say which one would be inappropriate, my purpose is not to slay one particular Bank, so I will not create an excuse for diversion into an individual policy by saying which one.
The basic proposition - Global Personal Assets minus Global Personal Liabilities equals "X" (I hope people will understand I will not put a figure to "X", that’s personal between me and the Bank). I apply for an extension to the overdraft, temporary for 3 months. That obviously affects the figure "X". The new situation would be that the balance of total Assets and Liabilities cover the overdraft by a multiple of Forty times. Not only that, the immediately liquefiable assets cover the proposed overdraft by a multiple of ten times. Result? Overdraft declined. The reason? Apparently they didn’t like the way the account was managed.
Hello..... knock knock ...... anybody in? This is insane, with a rock solid cover ratio like that from a customer who has never in 38 years with that same Bank, has ever defaulted on any loan whatsoever, and has never subjected them to severe surprises (we all make mistakes from time to time, I am no paragon of virtue, but no Armageddon inducing errors have ever occurred).
I can only conclude that the increasing shift by the Banks to a policy of customer service by computer driven Risk Management, has been maintained by someone still hedging their bets that the world is in fact flat ....... just in case it turns out that way... and messes up their personal targets and hits the 'ol bonus. A second more likely reason - and with a less frustration induced flippant conclusion - is that the ever increasing drive to reduce costs has gone crazy. Banks don’t like surprises (of any nature) as it usually means they have to go to the Financial Markets to cover a short position due to customer over spending. I can understand that, if you have (say) five million customers who each overspend by (say) £500 more than you expect, you have a £2.5Bn shortfall to make up by short term finance in the Markets - that doesn’t come free.
However its not rocket science to cover that on historical information and with sound judgment anticipate the shortfalls. Of course, at times you will get that wrong, so you try to ensure a system exists to get it right. However if that system relies on messing around long established customers with massive rock solid cover to an unexpected overdraft request - insane is the only word that can be used. Was that the reason ? Who knows, but as they don’t have the courage to state why they are refusing it other than bland silly generalisations I have no option but to try and figure out why. The case as they say, goes on as I have so called "appealed" and that is being considered.
Whatever the outcome, I shall now move Bank, after 38 years there with an unblemished record. That makes me feel sad, but I guess its the name of the game these days, where Banks are utterly incapable of making value judgments that don’t come out of a stylized computer risk programme. Will it solve the issue?, probably not as the next Bank will likely have a similar policy, but at least I will be no worse off. Meanwhile my original Bank will miss out on a Small Business I have started that is now beginning to thrive, and the associated short term business finance backed by 10 times positive cash flow (in addition to the asset equation above) will go to another Bank. How insane is that?
Its a crazy world we live in ...........