s/business-banking.dwt" --> Interest Errors - the Cruickshank Report
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cruickshank banking review


Interest Errors

Bank Mistakes - the Cruickshank Report

The Report comments that
There is anecdotal evidence which suggests that overcharging by banks is a problem for business customers. Instances are reported of interest margins being incorrectly calculated on overdrawn accounts, or of increased overdraft limits being agreed over the telephone without clarity about the rate being charged on the increased limit....Unfortunately this information has to remain anecdotal as bank audit agencies were unwilling or unable to give the Review any information on which to judge:
  • whether overcharging is balanced by an equal amount of undercharging, implying that simple bank errors were the cause; or
  • the scale of the discovered part of the overcharging problem.
Nevertheless, the fact that the UK can sustain a number of viable businesses which rely on bank errors for their livelihood suggests that there is a problem of some scale.

Our Comments

We do not "rely on bank errors for our livelihood", since our range is much broader, but if the Review had wanted more information it could have asked us, especially as one of our members had taken the trouble to submit evidence on other issues.

All our members have in our time been real live Bank Managers. Interest is calculated by banks' computers, and they get the sums right if they are given the right information. But human error or delay can mean "garbage in, garbage out".

Mistakes can arise through sloppy practice by the Bank, as the Review points out.

Occasionally of course an error is deliberate, but this is relatively rare.


Here It Is - The Information Cruickshank Couldn't Get

  1. In several years of operation we have found only one undercharge. However, this does not mean that "simple errors" were not usually to blame.

    Banks' systems usually revert to their high default rates of interest after a time unless they are told not to. So "simple errors" would not lead to "an equal amount of undercharging".

  2. We are quite open about the scale of overcharging among the accounts we audit - the information on this page was already freely available.
    But we do not go on to say that 70% of bank customers with borrowings suffer from these errors. Our clients are businesses which already felt they might have cause for concern about the competence of their branch.

Ask Banking Liaison Group next time!

The Cruickshank Banking Report


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