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How to manage your Bank Manager

Adam Brand takes a look at the changes in recent years.

In the old days (like the 1970s) Bank Managers tended to be frightening, authoritarian figures. People trembled when they went to see them to ask for a loan or an overdraft. They were pillars of the community, especially in smaller towns and villages where many of the local population would be known to them. The upside was that the manager had a great deal of autonomy from head office and was allowed to make his own judgements about individuals, often basing decisions as much on character as their business model or assets.

How things have changed in the last few years. The traditional manager has largely disappeared as the banks move ever more towards centralised, computerised decisions often based on credit scores and their own lending parameters rather than personal acquaintance.

Staff and managers seem to have got younger further adding to the appearance of lack of authority. Often the decisions seem to be controlled by the bank’s computer system into which they feed your details and which spews out an answer from somewhere in cyber space.

So how do you deal with this new world of banking let alone the occasional more traditional manager who may have survived somewhere?

Watch your balance

In the old days the bank might not refuse a cheque, standing order or direct debit despite you having `insufficient funds in your account. The manager would probably have been consulted before the payment was rejected... Now automated computer systems may automatically reject any payment taking you into the red or over your overdraft limit if you have one. It varies from bank to bank so you should establish what approach your bank adopts.

It’s a tough call keeping a check on your running balance but it pays if you can. Try to keep a running total either in your cheque book or a notepad. Jot down roughly what you have spent on cheques, debit cards, cash withdrawals so you can work out your balance. A quick way is to check online...

Avoiding penalties.

Bank charges have been in the news a lot lately. Because banks are looking to maximise revenue they tend to punish account holders severely if they go over their overdraft or account limit without permission or if payments are rejected because there is not enough money in the account. Charges of £30 or more are not unknown,

There has been a furore about this and many banks have been refunding charges to people who complain. The Financial Services Authority which is the regulator for the finance industry has indicated that banks are only entitled to charge the administrative cost. But although many banks seem to have given in on this issue the story is not over yet. Because there is no single law covering the issue, decisions vary between banks and where challenged in the courts, in different parts of the country. A test case might go to the High Court which should establish definitively what the customer’s rights are and what a fair charge would be... So in the meantime be careful - don’t assume that your bank won’t make a penalty charge whilst it awaits any outcome, or if they do they will be forced to refund it once the test case is finished...

Ask first

Even now it still makes good sense to ask the manager for what you want – not just write cheques hoping they will go through. As well as charges for rejections or going over limit, your account record at the bank will log such items and you might find yours credit position damaged. Despite the centralisation there may be some discretion left to the branch. You can generally see the manager or one of his assistants who may have some local room for manoeuvre or can at least check whether the computer will OK what you want.

Getting the overdraft you want.

If you find yourself running into the red during the month, particularly towards payday, it makes sense to arrange an overdraft facility. Overdrafts are amongst the cheapest money you can borrow and are ideal for tiding you over short term situations. They are not intended for long term borrowings. So for example if you have some purchases to make and you are expecting some additional funds to arrive shortly, talk to your manager. Be prepared to explain how you will use it, and if it’s short term, how you will pay it back.

Building up trust

Establishing a relationship of trust is important. Whether it’s with individuals in the bank or based on your record at the call centre, the bank will look at your record and whether you have kept to what you said in the past. What banks do not like are broken promises and particularly they don’t like to see debt solidifying and the general level of your overdraft rising. Whereas in the last few years bakes were happy to hand out loans and credit cards almost indiscriminately now in the light of changed attitudes banks are being much more cautious in making advances. It pays to present a clear idea of what you want the money for, how you are going to pay it back, how long you will need it etc. details of your occupation and income and proof of salary will also be useful.

Remember also if you make lots of applications for loans or credit cards which are turned down, a footprint may show on your credit record which may affect your ability to get credit elsewhere.

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