Whose money is it anyway?


Are banks allowed to gamble with your money? Plenty of people think not, and want to see a few bankers put in prison. i’ll tell you why I think this isn’t going to happen.

When you put money into a bank, it ceases to be yours. It belongs to the bank. As the money is the bank’s, it can do anything it wants with it. it can fritter it away, lose it or spend it on ladies of the night if it wants to. You have no say in the matter.

Crazy, isn’t it? It is, but it’s true all the same.

This dates back to a House of Lords ruling in 1848. That’s right, 1848.

The only thing that you can ask of the bank is that it pays you back when you ask, as long as the bank is solvent. Now you can see how they get away with it. If a bank uses its money to gamble, and goes bust, you can’t claim that they’ve committed an offence by putting your money at risk. You can’t demand your money back. It’s not your money.

You would be no more than an unsecured creditor of a failed business. You would have to line up at the back of a very long queue.

What about the wider effects? National economies have been ruined by the adrenaline-fuelled lotteries that masquerade as fine, upstanding banks. Individuals and businesses have been bankrupted. It’s just collateral damage. Nothing to do with me, guv.

This nonsense is based on the true nature of the bank/customer relationship. Despite all of the efforts to project an image of professionalism and responsibility, there is  nothing special in a bank’s dealings with its customers. This is true even though their advertising would have you believe that your bank is your mother, your best friend, your guardian angel.

When you give money to a bank, you’re making a simple unsecured loan, exactly the same as lending a fiver to a man down the pub.

In an age of technological advancement, with billions of pounds flying from virtual bank vault to virtual bank vault, these spivs and charlatans defend themselves from their customers by using a dispensation that they were given nearly two hundred years ago.

The law was an ass then; it’s an ass now. Perhaps it’s time that this changed.

Instead of hoping that the FCA and the Ombudsman can find a way to tame this profligate industry, why don’t our MPs earn their keep by changing the law?

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