TSB — Welcome Back to Local Banking?
As highlighted by Simon Read in The Independent this weekend, the recent TSB advertisements have hailed a ‘return to local banking’ telling an elaborate animated fairytale story of TSB’s origin as a savings bank. This is a story which seems to resonate with a UK public fed up with too big to fail, too big to jail high street banks and demanding real ‘competition.’
But just as story it is. The truth is that in 2013, Lloyds was forced by EU competition regulators to spin off 600 bank branches previously ear marked for the Co-op. This fell under the ‘Verde’ deal as a rebranded TSB bank.
Joel Benjamin of Move Your Money said:
“There is just one problem with the TSB marketing campaign. It is complete fiction. It’s flying in the face of bank lending practices, and without any bank lending data to back it up. TSB claim that in providing the bank your custom, you are “supporting local communities” and that ‘every penny of the pound you deposit goes towards helping other customers, fuelling “local” communities.’ Both claims are completely false. We’d recommend people considered real local banking options instead — plenty of which are outlined on our website.”
Far from being a bank that lends locally as claimed, TSB actually undertakes lending decisions on a National level, via HQ. There is absolutely no assurance that the deposits you make in your local branch will benefit local people.
Tony Greenham, Head of Finance and Business at The New Economics Foundation said:
“If you ask an American, German, Swiss or Japanese what a local bank is, they will tell you it is a bank that only serves a particular local area or region. Where the head office is in the local area, lending decisions are made in the local area, and you know your savings are supporting lending specifically in your local area. Only in the UK, it seems, is it permissible to call a national bank a local bank — a clearly misleading description.”
In fact, according to a recent Bank of England policy paper, the way in which TSB describes bank lending, i.e. cash deposits ‘lent out’ as loans and mortgages, is completely erroneous. Under a FIAT money system, based on fractional reserve lending, banks create money out of thin air as numbers on a computer screen when you apply for a bank loan. The loan is then deposited in the borrower’s account — creating new money supply.
Positive Money and The New Economics Foundation (NEF) have been campaigning to educate UK citizens that 97% of all money is created by private banks in this fashion — a fact confirmed by the Bank of England paper on ‘endogenous money creation.’
That the latest TSB advertisements conveniently ignore this fact to erroneously feather their ‘local banking’ nest only serves to confuse customers at a time when banks should be cooperating with regulators to advance consumer education.
Complaints regarding the misleading TSB adverts have been registered with both the Financial Conduct Authority and the Advertising Standards Authority — yet it remains to be seen what if any action will be taken.
Both financial regulators (The ASA and FCA) appear to have a brief which focuses on misleading product sales — (i.e. current accounts or mortgages), seemingly ignoring the misleading advertising positioning of financial firms, insofar as it does not reference specific financial products.
Until someone holds TSB to account, they will spin the ‘local’ story to match the sentiment of the British public.
This story was originally published at moveyourmoney.org.uk in 2014.
