Collusion between Australian banks

I transferred some money from Commonwealth Bank to ANZ on Wednesday. Going into Monday I will still be waiting for those funds to be transferred. Rather annoying actually because I want to invest them in the stockmarket, but I have missed my entry. I have trouble accepting that banks need 'up to 48 hours' to transfer those funds. There are a number of reasons why I am suspicious:

1. They can lend funds between banks on the overnight market, which is much more complicated than transferring funds
2. They never transfer funds in less time, its always close to the maximum period. Its like the maximum standard has become the minimum standard; meaning they will take advantage as much as possible.
3. All the banks have the same policy.

I informed the ACCC (regulator) of this rediculous abuse of power. I don't expect any change in policy. The reasons will be lack of substantive evidence, or its not our jurisdiction, or we don't hae the resources, or you should speak to the bank concerned...blah blah, etc.
-----------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Bank concentration in Australia growing

Oh great! The Commonwealth Bank of Australia has bought BankWest of Western Australia from the failed British bank HBOS. That's all we need - more concentration in bank services, i.e. less competition. Not a bad purchased for them because its great exposure to the strongest regional economy. The $A is down 30% offsetting commodity price falls. With all that business investment flooding into WA, there must be some opportunities there for banks.

This acquisition of course follows on from Westpac's acquisition of St George Bank.

Such good fortune could not have happened to a nicer group of people than CBA.
-------------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Vindication for my complaints

Its interesting how events unfold. People have a history. So when you have bad experiences with people, its not surprising that you will finally be vindicated. I have so little trust in the system that I did not take legal action against Michael Blomfield. I did not want the stress, I was overseas, and its such a negative activity to engage in court action. I'd rather engage in more positive action and leave the scandal to others. Hope she wins.
It comes as some vindication to see this guy involved in a sexual harassment scandal. The allegations are made on the SMH Online website. I lost $10,000 because of the way this guy's department closed down my account after I made a number of complaints about their service. This issue had a huge psychological impact on me years ago because your relationship with your bank is so important, and the law gives little confidence.
I suspect this culture at the CBA is a legacy of its former days of government ownership. The worst cocktail would have to be a privatised state-owned enterprise. Culture-wise it would have to be like a public servant on steroids. Kevin Rudd comes to mind. Yep, that's the image that comes to mind.
-------------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Do we need banks?

I am glad I wrote this latest blog. It has me thinking - Do we actually need a bank? Well lets consider what I actually use a bank for:
1. Retaining savings - as indicated I could care little about the interest on bank deposits, I seldom keep money in under-performing bank accounts earning 5-8% or less before taxes and inflation
2. International transfers - I could use Paypal to transfer money, but the issue is - from where to where?
3. Convenience of cash - OK this is a big issue. The banks have national branch networks and international affiliations that offer alot of convenience.
4. Stockbroking - Well it used to be nice using Comsec because it meant the proceeds from selling stocks went straight into my bank account. But I can use an independent provider like Etrade if the banks are going to get greedy.
5. Funds Management - Same deal as brokers - though I think its not good to use your bank as a fund manager. Thats just lazy investing because why would the best fund manager be the company that you happen to hold your savings with.
6. Bank loans - Well in this new financial market we now have alot of non-banks lending money to people to buy homes. Unlike banks they borrow from international capital markets. eg. Aussie Home Loans, Mortgage Estate, Wizard Home Loans.
7. Credit card - Well there are alot of institutions offering credit cards these days, eg. Virgin, etc So we dont need banks for that anymore.
8. Financial advice: Well a bank is the last place I would go for financial advice, but regardless there is alot of third party vendors and standards and codes of conduct have improved greatly.

I have pretty high demands compared to most people's financial institution requirements because I go overseas a lot, I trade stocks. If you are living a simpler life, you would be better advised to go to a local bank or credit union that offers better interest rates and less fees.

OK so we have established that I need a bank because the government has pretty tight barriers to entry. The payments system is currently pretty well dependent on banks. But I can see banks loosing their monopoly over money. How you might ask? See my Strategic Directions blog at http://strategicdirections.blogspot.com. I think there is alot of disgruntled customers out there who would readily abandon banks. Lets face it - banks long about signalled that they are not interested in small customers. Thats why they treat you with contempt. They are more interested in corporate deals, home loans and funds management. Managing your cash deposits is really a hassle they dont need. Thats why they charge you high fees for it. So don't use it.

------------------------------------
Andrew Sheldon www.sheldonthinks.com

Do I have high expectations?

My girlfriend told me the other day that I have high expectations. Well yeh, I guess I do. I guess she meant it as constructive criticism, but isn't that a good thing? Who ever achieved anything by having low expectations. Dont people tolerate a lot because they have low expectations. I think my expectations are reasonable. There are a great many banks that offer decent service at least some of the time. Its not as if they can't afford to pay good salaries to attract good people. I dont know the internal politics. Maybe senior executives are all so insecure that they avoid employing people that might compete with them. I worked at a government-owned corporation Australia Post during my university days. The culture was soul destroying. It attracts the worst possible people because of the corrosive structure. I was given 5hours to sort mail. I did it in 2.5-3hours and was paid for 5hrs. Couldn't wait to get out of there. Is this the legacy of a once government-owned CBA. Cultures take time to change, and one wonders if some bad values have persisted.

High expectations need not be some lofty floating abstraction. I have high expectations because I think. I break down problems rather than walk away from them. It requires critical thinking, and a sense of reality that goes beyond petty politics. I was being provocative sending an email to the bank suggesting the MD should be sacked. I expected his to have a sense of objectivity. Of course his future did not lie in pleasing me. I am one customer. Banks offer you a 5% return on your money (before tax) because you have low expectations. I expect 100% an annum. My best return is 3200% over 3 years. That was when I was with Comsec. Maybe they were envious.

I am not imposing my standards on them, they are imposing them on me. They closed my account, they froze my account, they disabled my ability to trade, they sent me duplicated and useless marketing literature. I merely informed them of the uselessness. It was there choice to say: "Andrew, clearly our bank service is not up to your standards', enjoy your life. We will close your account when you ask. Well I can't even do that.

The issue is actually not - low or high expectations - the issue is business model. Which bank believes a good business model is one that screws customers for the highest profit? And which banks believe service is about offering a value in exchange for value. You need only look at the way banks earn revenues - its no longer factors that you compete over like 'the interest rate spread' - its fees. Disclosed in fine print, and applied with contempt because they have no interest in removing the inadequacies in their services which cause you to be levied with fees.
---------------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Why am I so angry?

You might ask the question - Why are you so angry?
The reason I am is angry is:
1. Because it doesn't need to be like this. These stuff ups dont need to happen.
2. Banking is important - it is a central pillar to our society, as you realise when central and international banks drive the global economy to the ground and cause massive bank failures.
3. Because I have lost alot of money because of their stuff ups
4. Because they dont acknowledge their mistakes
5. Because they act with disregard for the customer
6. Because they get away with it because of government favours
7. Because those Australians who dont need full bank services stay with them, ensuring there is no competition.
8. Because they don't do anything about the problem
9. Because they earn huge salaries and they cant think
---------------------------------------------------
Andrew Sheldon www.sheldonthinks.com

Double dipping at CBA

I was having all sorts of problems using Comsec to manage my accounts using my software. I have since joined Etrade, and after having been trading with them for a year, I have not had any significant problem. Etrade has never had to contact me, and I have only had to contact them once to change my address. They did make one stuff up - I asked them to change my address, but instead they set up a new account. But all is forgiven, they dont make a habit out of it.

The law requires CBA to keep its broking activities separate from its banking activities. One day, I had to pay default fees for not having money in my account. As indicated, I have not had this problem with Etrade. I dont know why the problem occurs with Comsec. My possible explanations are:
1. Their software systems dont update all the time so I am misled into thinking there is money in my account when there isnt
2. Their software doesn't account for incomplete trades - so there is a mismatch between the balances that I discover too late
3. They dont provide customers will a real-time statement of their account balance, so customers have to make their own calculations. If you are trading alot this is not easy. Instead I had to calculate how much money is due to settle in 3 days, and how much will be paid within 3 days. Etrade calculates those amounts for me :) I even asked Comsec if they can set my account on the same terms as Etrade, so there is no 3days credit (settlement), but they couldnt. All very silly!

Anyway, to this day I never realised why this occurred. The attitude of the bank however was incredible. As far as they were concerned I was a 'defaulter' and they closed my account. I was overseas at the time, and whilst they say they tried to contact me....I doubt it. They sent a letter to my Australian address but I was not in Australia to receive it. In fact they knew I was overseas, but I actually dont expect them to act on that. My email was my preferred mode of communication - they didnt use it. I dont think they should shut down an account without warning, and I dont think they should undermine a customers ability to trade. I asked them why they didn't just restrict my ability to buy new stock, but maintain my ability to trade out of existing positions. No explanation!
They closed down my account and had my electronic CHESS certificates converted into Holding Statements. The implication is that I could not trade these stock for weeks in a falling market. They probably cost me $10,000. Do you think they took adequate precautions to protect my interests as a customer. Do you sue a bank for $10,000? Of course their contract allows them to do that. But do you expect that type of behaviour. According to the Ombudsman, they have no case to answer. It would require legal action.

They did not offer any warning before closing my account. In fact I had tolerated the account defaults for some time. It was costing me $30 each time. I complained when they charged me $30 twice - once for Comsec, then again for CBA - thats the double dipping part.

CBA work culture

Based on my experiences at the CBA, I have come to think about why the organisation has a culture like it does. I have no specific recollection of the service at a branch level, and the replies I get from staff are always polite. Though they always seem to be a week too late. There must be a culture at CBA that saids email inquiries are less important than telephone or facsimile. Frankly they provide an email service option, so shouldn't I feel compelled to use it. They offer to reply in a day.

Anyway its been a long time since I banked with NAB, and it seems a generally social consensus that banks offer bad service, and consumers just accept that this is how it should be. People will say, why dont you just change banks. But the problem is - to whom? NAB, CBA. I'm running out of 'full service' banks that provide international banking and broking services.

But it makes me reflect on the culture. Is this organisational culture a legacy of its previous government ownership. Does the CBA function like a bureaucracy? Maybe the top executives are imports, but are they frustrated dealing with the legacy of work cultures developed before? Hmm...dont know. But actually I have always found the staff polite and helpful. I think its the senior executives. Afterall, they are responsible for the system failures, poor training, etc.
I wonder whether they were outside appointments or former bureaucrats that finally floated to the top?

Poor system execution

Because I was a customer of CBA I took up the option to use Commonwealth Securities (Comsec) online trading service. The business unit makes alot of sense, so its been a sensible strategy for them. Common sense though. Not the decision of genius. But they were the first banks to do it big time.

One day I went to the Martin Place office of CBA to apply for an account to trade exchange traded options. The girl there was helping me fill out the form. Sadly I could have done a better job if she hadn't. As it turned out the next time I went to that office, she was being retrained. But the result of this bungle was that she had opened a new account rather than add a new feature to my existing account. Clearly she didnt understand the procedures as she already knew I had an account, she had accessed it for me.

I did not realise that I had a 'new' account (as opposed to an ETO trading facility) until a week later when I started receiving duplicate copies of junk mail from Comsec. Now clearly this bungle was an extension of the previous one. But there was more to it. I was growing tired of CBA Group bungles, so I was getting annoyed.

Some time after I received an email asking me if I wanted to fill in a questionaire on CBA service. Now I welcome customer feedback opportunities. But nothing pisses me too more than executives that use these services to feather their butt. This questionaire was a blatant attempt to make this executive look like he was doing a good job, and not a sincere attempt to improve services. Customers dont like to be pigeon-holed, but this questionaire offered no opportunity to comment on CBA services, specifically or generally. It was a multiple choice option...why....its something the division MD could place on his reports to Group CEO. I saw right through it, and sent the MD comments suggesting he should be fired. Interestingly I got a reply from him...an empty reply. I actually thought I had a reasonable case to make, albeit in frustration and vented as anger. I think from that day I was placed on a 'marked persons list'.
You might wonder - Did I not expect his to respond the way he did? Honestly no. I thought the facts supported my point. I thought a MD would have a healthy self esteem, and would be keen to address any problems. I perhaps also expected some empathy for the stuff ups that I had endured.

These companies have earnings of $2-3 billion each - they are cash cows. I would have expected them to get their systems in order. Systems management is one of the basic components of running a business. Clearly there are no critical thinkers in the organisation. So to be getting two emails from the marketing office highlighted poor training, staff selection, and it was compounded by poor marketing software design. No contingency planning there.

Maybe I could have been more tactful, but I thought he would be more threatened if I asked for his job. Honestly, I guess I just didn't think someone in such a senior role would have some a distorted sense of reality. It saids something about the work cultures of big institutions.

Does CBA do anything right?

To be fair to the CBA - they do some things right. More than anything I want to say that the quality of banking in Australia is shockingly bad, but this is a global phenomena. I recall a few years ago paying $120 to transfer $3000 to Australia before I discovered Lloyds Bank TSB was offering a service for $10-20.

So what is CBA doing right? Firstly I am not requiring banks to act as a charity, nor do I have any problem with banks making great profits. Personally I dont even mind them running 50% of the economy if they could be trusted to act with integrity.

Anyway, here are some things that spring to mind:
1. Pre-packaged stock: The CBA Group was encouraging the young and old alike to invest in a package of stocks it had bundled together. That struck me as a clever advertising campaign.
2. International transfers: The CBA has developed a $20 international funds transfer service which is pretty easy to use. It would have been nice for them to beta test the service because my bank did not receive the funds. But they did refund me. Why? Japanese banks are not nationally integrated and their service had no capacity to input the branch number or address. Sadly I missed out on buying a property in Japan. They were slow to get back to me. Nope...no return service in a day...more like a week.
3. Commonwealth Securities: The CBA was a leader in their shift to stockbroking. I suspect they picked up alot of business as a result. Their online software was ok, though the software they developed was pretty shit. Pro-Trader charting was shit and they wanted $70/quarter for the privilege, though free if you traded alot as I did. Really I only wanted it for the straight-thru processing of orders.
4. Commonwealth Funds Management: I dont see anything wrong with the way this business division operates. They target individuals and employees through corporate clients. Don't know if there are any kick backs? It seems to be how alot of the world works. So one needs to have a healthy level of cynicism.

Disclaimers - A means of abuse

Every company has their disclaimer conditions stated in their contract. This is of course not an 'escape clause' for banks or any other corporation, since they are still required to act within the Corporations Act and the Trade Practices Act. But these laws are subject to interpretation, which requires court action. The court system of course has high cost barriers making justice outside the whelm of most bank customers. Are you likely to sue a bank, or just find another? Well I'm on my second, and I suspect the 4 majors realise that being the only banks in a position to offer 'full service' means you have people by the leash. Its collusion of the most worst kind.

Now we have a banking ombudsman just as we have a communications ombudsman, whose job is to answer cases of bank injustice. But this is really just a political facade intent on diminishing public angst about public discontent with banks. Having gone to the ombudsman over my issues with the CBA, it was apparent that their function is only to enforce bank contractual terms. Of course, given that the banks have such 'one-sided' agreements, do I have any recourse? You guessed it - zip! If you want justice you really have to sue the banks. But dont think it will change them. You might win the case, but they will win the war. Look how long it took parliament to legislate to get the banks to reduce their unreasonable charges on credit cards. Well you might wonder why that cozy monopoly persists? Its because banks are powerful. They buy a lot of advertising from the media, and they have the power to raise interest rates at opportune times.

Have you ever noticed that banks and a great many other corporations have 'one-sided' contractual agreements. The customer is considered to be a 'price taker'. Of course most businesses do not use the power that your signature on their contract has granted them. Why? Because they are worried about being subjected to public scrutiny and losing sales.

But banks act with absolute contempt for the public. Why? I think its because they can. The national banks in every country command a powerful position in the economy in the following sense:
1. The opinion of their CEO carries political power
2. They have a huge market share by virtue of being able to take over other banks because they existed first, so they have the economies of scale and comprewhensive service that some of us need.
3. Politicians like to be on the board of banks
4. Banks have a great deal of cash so they make great contributors to your political campaigns

The bigger is perhaps the legacy of the banks being concentrated in a very small market. We just dont have a good choice. A few years ago we got competition in the bank sector, but wisely those foreign banks focused on the commercial banking market because they lacked the branch network of the majors.

CBA non-disclosure clause

Several years ago now, around 2002 if memory serves me, I approached the CBA for a personal loan. At the time I think I had $35,000 in shares and a good job as a mining analyst, so I thought there should be no problem, even if I was investing in more speculative type stocks.

After visiting the manager at the CBA Martin Place branch I was surprised to learn that my loan application had been refused. Nevermind the fact that it took a week to get a reply when you hear about loan approvals in a day, I was more interested in the reason why. I suspected the reason might be that I had previously got a personal loan to buy stock and not used the facility. I suspect that they didnt want to waste the time with a loan application that was never actually used. The previous loan was for $10,000 and I think I repaid in within 3months because I decided the stock market was not so attractive.

But I personally dont think that is the way to handle the issue. A sensible bank would do the following:
1. They would price their loans to reflect the costs of loan applications, inquiries - that way they make money on all loan applications and inquiries.
2. They would disclose to their customers why their loan application had been rejected.

I felt really bad about this. I was uncertain whether I had done something wrong. Did I have a bad credit record? Was I being puinished because I was related to my mother, who was being placed into bankruptcy by another bank. I didn't know. I was dejected and I wasn't offered an explanation why. I felt like a criminal, when I thought my credit credentials should have been good.

In the years that followed I made alot of money from stocks, and I did it without leverage. But I can't help thinking that my experiences with CBA have on some level put me off trusting banks to execute with integrity.
They act with impunity.

CBA not the only bad bank - I think just the worst

From the outset I want to be fair to CBA. They are not the only bank to offer shit service. I think they are just the worst. Before the CBA, I used the National Australia Bank (NAB). Here is an experience I had with the NAB.

When I was at university some 20 years ago I went to the NAB Neutral Bay ATM branch to withdrawal funds. I was a student living on meagre funds at the time. I appeared to have a little more money than I expected, from memory $40 instead of $20. Thought nothing of it, and withdrew the bulk of it. I was low on funds, but I was very soon expecting a income tax refund from my part-time job at Pizza Hut.

I was glad to have received my Aust Tax Office (ATO) cheque and went to the NAB to cash it, as I needed the money to go to university. I knew an ATO cheque was as good as cash to a bank. When I got to the branch, they told me my account was frozen. I wondered why. They said I had overdrawn the account. Now I immediately reflected on the $20 that was put in my account that I suspected should not have been there. I said I have a ATO refund cheque for some $400, that should clear the overdrawn amount of just $20. They said I would have to contact head office.
Well I was annoyed. It was there mistake and I was being put out. I had no money and I had to go to university lectures. So I said stuff! I'm going to go open an account with the CBA with my ATO cheque in hand.

So NAB shareholders should reflect on this. The implication of offering me bad service was:
1. They lost a great customer because I use my bank for alot of share trading as well as having a considerable amount of funds on deposit.
2. They lost $20 - I taxed the NAB for my inconvenience
Sorry shareholders - in a sense you deserved it. And you probably bank with them. Suckers!
Hmmm...maybe I should have more empathy. Nope....I feel particularly screwed by banks.
But then, on the other hand I have heard such bad things about banks over the years. For example:
1. Westpac was accused of leading farmers into risky Swiss currency loans and hedging instruments which went awry, without properly explaining the risks
2. Banks have been closing branches without any regard for client needs.
Anyway, I think we get the picture. Alot of people have a poor regard for banks. You get the sense that the feeling is mutual - that banks have little regard for banks.

Which bank? Worst advertising compaign ever

The Commonwealth Bank of Australia (CBA) will go down in history as having instituted one of the worst advertising campaigns in history. The by-line was 'Which bank?" Which bank allows you to ....access your money....., which bank....allows you to....
You get the picture. With the decline in bank services, it has really bounced back at them, becuase now people say.... Which bank.....screws you to high heaven?
Well, thats the easiest question.

You might ask why do I get so angry....its because the reality is so far from the advertising jingos. So I have decided to develop a blog dedicated to the company, because I cant believe the INCREDIBLY bad service I have received from this company. Really surprising because they have made alot of money from brokerage on my share trading account.

So I want shareholders to know how bad their bank treats their customers. After I air all my grievances, I will talk about some of shareholders, so feel free to send me links. Sorry I can't publish your grievances. This is likely to go to a legal case, and I can't be responsible for other people's assertions. Its intimidating enough taking on a bank. But I can provide a link to other sites.

Commonwealth Bank screws people for money

About 6mths ago I asked the Commonwealth Bank (CBA) to close my savings account. They are charging me $5/mth for no service. I dont use the account, I have asked them to close it. I dont have a fax machine. I sent them an email from a secure site. I needed a password to access this area. They are such parasites. They have been collecting $5 each month for years for no service.
I am living overseas. They have an email service attached to Netbank, but they refuse to acknowledge emails. They dont even confirm the authenticity of the email I send them - which is on their record. They just ignore it.
Since when did service constitute screwing people!