NEWS ANALYSIS: Banks fall silent amid charges row

Investigations into the legality of bank charges are seriously damaging the reputation of high-street names such as HSBC and NatWest. David Singleton looks at how the industry is dealing with the tide of negativity.

The silence of big banks over the past week has been astounding. As the rebellion over bank charges gathers pace, individual bank chiefs have been conspicuously absent from media duties. Instead, the unenviable task of defending the industry has fallen to trade body the British Banking Association.

The claim against the banks is straightforward: that they have been ill­egally charging customers for breaching overdraft limits. The Office of Fair Trading is currently investigating whether these charges are legal, and is due to report back next month. But thousands of customers have already won compensation, and thousands more are likely to follow suit.

All quiet
The comms directors of Barclays, HSBC, LloydsTSB, NatWest et al appear to have decided that the best PR strategy is to stay out of the spotlight. John Varley, chief executive of Barclays, made a brief media appearance last week, but stuck largely to defending the bank’s £7bn profits.

He largely steered clear of bank charges, and may have been wise to do so. As far as charges are concerned, the banks are in something of a PR quand­ary. They acknowledge that opinion is against them and do not want to add fuel to the fire. But the decision to lie low has spectacularly failed to prevent a spate of damaging headlines.

The Independent has led the charge. ‘Customers see red over the scandal of illegal charges,’ ran a page-two headline last week. It followed this up with front-page news that recent coverage had galvanised a further 20,000 people to stand up to their bank.

And it is not just The Independent that ran with the story. Bank charges featured in just about every national newspaper last week, and were the subject of a Tonight with Trevor McDonald show last Friday (see below).

Last week’s coverage was particularly damaging for the industry’s reputation as it coincided with news of record-breaking profits in 2006. For example, it emerged that Barclays’ profit was the equivalent of £1,360 every minute.

The British Banking Association acknowledges that the individual banks have been reluctant to publi­cly defend themselves over the thorny issue of bank charges. ‘While this OFT investigation is going on, the banks have not done an awful lot publicly,’ admits director of retail PR Lesley Mcleod.

But, despite their media silence, the big banks are well aware that the recent negative headlines are tarnishing the industry’s reputation. Behind the scenes, comms chiefs have been meeting to discuss just how to limit the damage.

'We have some work to do’
‘It wouldn’t be right to say that no thought has been given to the presentation,’ says Mcleod.

Mcleod adds: ‘The high-street banks’ PR people are conscious that there is a groundswell of public action. That’s not unexpected, but it is fair to say that we have some work to do to win the PR battle.’PR discussions have also focused on how the banks would react to the worst-case scenario – a negative verdict from the OFT. Mcleod says: ‘We are looking ahead to the OFT ruling. There certainly have been PR discussions about it, collectively, across the banking industry. But it’s not something we’re able to discuss at the moment.’

The industry claims it has no choice but to stay quiet on the issue of bank charges until the OFT delivers its verdict.

But critics disagree and say there is another explanation for their deafening silence: that the banks are keeping quiet because they realise they do not have a leg to stand on.

The campaign against bank charges

Martin Lewis (pictured) is a broadcast journalist and the founder of, a website that has been leading the campaign against bank charges: ‘I started my website four years ago with £100, and now we’re reaching 2.5 million people in the UK a month. We had 830,000 people downloading template letters to banks even before last week’s headlines.

‘I know journalists around the country who have got their bank charges back. And the same thing that is happening in news­rooms is also happening in the smoky rooms of the pub. Millions of people are potentially going to do this. I honestly believe that this is the biggest consumer revolution since the poll-tax riots.

‘What we’ve seen over the past week is the newspapers picking up the story in reaction to bank profits, because that is a good peg. But actually this had been rumbling away in the background long before the shriek from the media that we heard last week.

In the same boat
‘The individual banks are keeping their heads down. Have you heard a bank argue its views yet? It’s being played out by the commentators and the trade body of the industry. You very rarely hear one particular bank mentioned because bank charges go right across the board – they are all doing the same thing.

‘The banks won’t appear on a programme with me. When I was putting together my own Tonight with Trevor McDonald programme, aired last Friday, every bank refused to comment and said we should talk to the British Banking Association. I would love to publicly debate bank charges with any senior banker. Any time, any place. I will happily do it and I will arrange the TV channel.

‘But the fact is that you can only do PR when you’ve got an answer. No bank wants to defend bank charges in court, and if they can’t defend them in court then they can’t defend them in PR terms. They will just pay out.

‘I’m a former PR man – I started my career at Brunswick. If I were advising a bank, I’d tell it to keep quiet.

Because it’s very easy to have a rant with consumer might on your side, and it’s very difficult to defend yourself against that.

‘The banks are using the only PR strategy they’ve got at the moment. Keeping quiet is their best bet because if they try to defend bank charges, then people just get more wound up. All they can do is sit tight and wait to hear from the Office of Fair Trading.’

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