Monday, November 12, 2012

Dave Fishwick - lighting the fuse at the House of Commons for local bank reform

'When people rob banks they go to prison. When banks rob people they get bonuses'. Dave Fishwick owner of 'Bank on Dave!' the new savings and loans outlet in Burnley, Lancashire, England was in rattling good form at the House of Commons last week the day after Guy Fawkes day. In a crowded committee room he regaled MPs, academics, financiers and advocates of local banking with his story of supporting local people with loans and with decent interest of 5% on customer's deposits. Steve Baker MP for Wycombe chaired the meeting: 'Better Banking for Britain'.    

Fishwick is no soft touch, he does refuse some requests for loans - the obvious question has to be asked: 'Will they repay? He made £10,000 profit in 180 days and gave it away to local charity shops. He takes in and lends £100,000 each month and has a waiting list for deposits and loans. The judgement about a loan is largely a decision by a person and not by a credit-scoring computer. His 'Bank on Dave!' has no greater a default rate than the high street banks. He started his venture when suppliers to his mini-bus factory were refused loans by the big banks. 

The Financial Services Agency (FSA) which licences banks, require a £10m reserve which is far in excess of what is truly needed for a small limited-purpose local bank besides being beyond the funding of one.  Someone in the audience wondered if credit unions under their new flexible rules would be enough to achieve what Dave wants? Mr Fishwick does not favour that option and Professor Richard Werner (Chair International Banking, University of Southampton), who was present, said that despite recent loosening of rules, these do not permit true 'CU banks' to form. He wonders if the City of London banking establishment has written the restrictive CU rules?   See his YouTube video on Local Banks. 

Dave Fishwick spoke of the German Sparkassen local bank system which has flourished for so long to the benefit of the German economy. He has visited these successful small local banks and others in New Jersey, US, which shows him that the UK is abysmally lacking in this facility. The old local UK Trustee Savings Bank movement, has now long since been absorbed into the big banking movement.  

I made a point about the poor regulation of the banking monopoly as compared with the achievements of good regulation of the health service monopoly, with regards to the supply of services.  This was part of my letter on that theme as published by the FT on 23 October 2012:
... By comparison, the regulation of the health service monopoly seems to work well in respect of providing supply where needed. General practitioner services are locally available and face-to-face consultation takes place, usually with the same doctor. It would be a scandal if we routinely had to travel 50 miles for help with a minor ailment. But we are tolerating such a mismatch in credit supply [from banks]. Typically, someone based at that distance or more makes the credit decision for a small company; and it might exist for them only on a spreadsheet and as some tick-boxes on their screen.

Also at the meeting was Derek French of the Campaign for Community Banking  which works for the retention of local banking services. When the last banking branch shuts in a small town or village it has a devastating effect on other businesses. The draw to visit a town was the banking service provided and other businesses were visited in addition. When banking disappears so does this valuable incidental trade, to the detriment of jobs and local economic vibrancy.   
posted by Charles Bazlinton. Author: The Free Lunch- Fairness with Freedom


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