Friday, 28 September 2018

Unethical business


My generation was brought up to regard loyalty as a virtue.  The Second Scout Law, which I promised to obey in about 1947, then read:

A Scout is loyal to the King, his country, his country, his scoutmasters, his parents, his employers, and to those under him.

Perhaps wisely the current law stops short at "A Scout is loyal" and doesn't go into detail.

Unfortunately the message doesn't seem to have percolated into the minds of those who run our businesses.  Maybe their current leaders never joined the Scouts.

A report published today  by the charity   Citizens' Advice reveals a "loyalty penalty."  Those of us who stick loyally be our insurers, banks, mobilephone and broadband operators are ripped off by on average by £877 a year. The worst affected are the elderly: we are either too too trusting or too ga-ga to notice.

Happily, though elderly I am alert to the problem,but greatly resent having to spend several mornings  in July each year, when both my home and car insurances become due, searching the internet, checking  comparable conditions about what exactly is covered and what the excesses are, before choosing yet another company.  Even Saga, which I had naively assumed to be a charity devoted to the welfare of we elderly, turns out to be a publicly quoted company not averse to ripping us off if we aren't ever watchful.

I'm pretty confident that my energy supplier Ecotricity, for both gas and electricity, treats me fairly.  I hope I'm not mistaken

 Banks are major culprits.  A few weeks ago I received a letter from Lloyds informing me that my allegedly favourable savings account, which accumulates the princely interest rate of 3%, (0.5% below inflation)  will shortly run out of time and be re-invested in another savings account paying 0.2%.  They even send me an illustration that if I put £1000 in this account at the end of a whole year it will be worth £1002.  Whoopee!

 I suppose they ease their conscience (or comply with the law) by arguing that they have at least warned me, though it;s in pretty small print.

How they have the cheek to offer these derisory rates of interest when, if I borrow from them, they'll charge me 25.9% (yes, that's 25.9 - not 2.59)  beats me.

Clearly the guiding principle of our businesses is not fairness, or the Golden Rule of  "Do as you would be done by" which I believe operates in every major religion,  but "What we can get away with."

We live in a sick society.  I'm surprised there is not more outrage. Where is "Occupy" when you need them?

11 comments:

  1. Surely if there's fault in this situation, it lies not with the organisations, but with those customers who prioritise short-term deals over long-term ones?

    If two organisations offer competing products, one of which is 10% cheaper over five years, and another which is 20% cheaper for the first year but then increases to cost more than the other after that, and all the customers flock to the second one because they only see the initial headline figure and ignore the future costs, what are they supposed to do? Keep offering better long-term deals and go bust? That helps no-one.

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    1. Welcome back, Anonymous - we haven't heard from you for a while. I know exactly what you mean and I'm not necessarily against "taster" deals in some circumstance. However, what I'd like to see is at least some banks and insurance companies prepared to treat loyal customers honestly - that they may not offer the cheapest deal in the short run, but will treat us fairly over time without our having to indulge in tedious research every year.

      In the Lloyds Bank illustration, that is not a taster deal (I have been with that bank for for 48 years so don't need to be attracted) what they offer, in one of their savings accounts, is a more attractive rate for one year. Then it switches to the derisory rate of interest, in the hope, I presume that the saver will either forget or not notice. That is not "Doing as you would be done by."

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    2. what I'd like to see is at least some banks and insurance companies prepared to treat loyal customers honestly - that they may not offer the cheapest deal in the short run, but will treat us fairly over time without our having to indulge in tedious research every year.


      But they tried that, and they lost all their business to the ones who offered taster deals, so they stopped.

      Do you really expect companies to keep doing the same thing and expecting different results? Isn't that a definition of insanity?

      In the Lloyds Bank illustration, that is not a taster deal (I have been with that bank for for 48 years so don't need to be attracted) what they offer, in one of their savings accounts, is a more attractive rate for one year. Then it switches to the derisory rate of interest, in the hope, I presume that the saver will either forget or not notice

      Um, that's exactly what a taster deal is! Just because you have had a current account with that bank for 48 years doesn't mean you will have your savings account with them too. So if they offer a savings account with a 1% interest rate, and Barclays offers one with a 3% rate for one year falling to .2% after that, then most people (even ones who have been Lloyds customers for years) will open the Barclays one and nobody will save with Lloyds. So Lloyds have to do the same or they will have no savers.

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    3. My objection is not so much to the taster deals, as to what happens afterwards. Lloyds Bank has several savings accounts and what I want them to do is reward my loyalty by putting me on the next best account rather than the one with the very lowest rate of interest. I shall find that next-best account, but would rather they did it for me rather than caused me to waste precious hours of my retirement.

      There was a time when we supposed that banks and insurance businesses (such as the aptly-named Prudential) were caring organisations which looked after our interests. Now the ethic seems to be to rip us of they get half a chance.

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    4. My objection is not so much to the taster deals, as to what happens afterwards. Lloyds Bank has several savings accounts and what I want them to do is reward my loyalty by putting me on the next best account rather than the one with the very lowest rate of interest

      But surely you must understand they have to do that as it's the only way they can afford to offer the taster deals. Because the taster period is a loss-leader, and because lots of people will switch away as soon as the taster period is over to the next taster period with someone else, then they have to make up enough money on those who do stay to cover the losses they made on those who switched away after the taster period.

      You're asking them to make a loss for you, but if they do that for everyone, they go bust, and how does that help anyone?

      There was a time when we supposed that banks and insurance businesses (such as the aptly-named Prudential) were caring organisations which looked after our interests

      How touchingly naïve. Such a world is impossible. 'It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.'

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    5. You describe the current business model and its raison d'être very clearly, and I still maintain that it's unethical. I'd like to see some rival companies reject it and promise to treat their loyal customers fairly. I believe they'd thrive as did, for example, the early Quaker enterprises (Barclays. Rowntrees etc.) Perhaps that is "touchingly naive" but I'd like to see it tried.

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    6. I'd like to see some rival companies reject it and promise to treat their loyal customers fairly. I believe they'd thrive as did, for example, the early Quaker enterprises (Barclays. Rowntrees etc.) Perhaps that is "touchingly naive" but I'd like to see it tried.

      It was tried (it was the model before the upstarts came along with their 'taster rates'); it failed (everybody flocked to the 'taster rates' and the old-fashioned ones lost business); why would anyone try again with something that's already been proven to fail?

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    7. So we need a consumer revolution to dish the "upstarts" and return to decency. It's up to us.

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    8. Yeah except people have already voted with their feet and they voted for taster rates.

      I mean I don't doubt that you could find a lotof people who would say that they want what you want. But what they say isn't important, what matters is what they do and what they do is find the best short-term deal they can, take advantage of it, and then move onto the next one when it's done.

      You can't change human nature. And human nature is to take advantage of the best deals.

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    9. So capitalism as at present practised is nasty, brutish and rapacious. T believe there is a better way, and should like to see some firms prepared to find it.

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    10. No, capitalism simply responds to what people want. So if you have a problem with the solutions it comes up with, it's not capitalism you should blame, it's people.

      And as you can't change human nature, and so any effort to go against human nature is doomed to fail (possibly after killing tens of millions in the process)…

      Well, to misquote the man a bit, capitalism is the worst system there has ever been… except for all the other ones.

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