Many people are struggling to meet their mortgage obligations. The banking industry understands that the financial problems experienced in 2008 were largely the result of many failings on the part of the banking system. They are taking new measures to reform their policies and give customers the message that they are concerned about helping them recover from the aftermath of the financial crisis. However, the free banking system may be the victim of those new policies.
Martin Wheatley is a renowned financial veteran who serves as the Financial Services Authority’s director of consumer and markets division. Wheatley has gone on record saying that the free banking system is an obsolete model to the industry. However, he made it clear that he was not recommending abolishing free banking. Nevertheless, his concerns may allude to his point of view.
Many experts, including those within the FSA, argue that the banking system needs to be drastically reformed. This is becoming increasingly evident as unemployment is rising alongside declining wages. Nevertheless, it remains to be seen whether ending the free banking system would be for the greater good.
Wheatley stated that if banks provide free services to their customers, others are going to have to foot the bill later on. Banking subsidies are provided through a variety of support measures. However, customers are likely to become rather irate over his point of view. Although banks may define many of their services as free, customers are already feeling the pinch from a number of bank fees that are being forced onto them. Many argue that customers should have an easier time paying down their mortgages with record low interest rates, but they fail to account for the different fees that can add their bill up much higher than it should be.
One of the biggest concerns the FSA is facing right now is deciding how to prevent another rerun of the PPI disaster. One of the biggest contributing factors to the PPI scandal was he fact that many banking executives were given large bonuses for exceeding sales quotas. Wheatley may be indicating that the FSA is going to move towards reforming compensatory structures for banking executives to prevent another massive PPI fraud.
The FSA said that they have already taken measures to keep foreclosure rates down. Some of these measures, such as imposing new forbearance laws to protect struggling homeowners have helped many people keep their homes. However, mortgage rates and foreclosures rate may continue to increase in the future if the regulator doesn’t pursue another course of financial reform.
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