Hong Kong banks need to put the customer first, not profits
N. Balakrishnan says it’s time for the city’s banking regulator to step in to ensure the big banks are giving consumers what they want
A long time ago, I was persuaded by a credit card company that somehow the colour of the plastic you carried in your wallet determined your status and so I applied for a “gold” card. As a reward, I was told to go to the newly opened Convention Centre in Wan Chai to pick up a free gift.
Crazy for credit cards: Hongkongers aged 18-35 spend over 46 per cent of monthly income on credit purchases
When I arrived, there was a long line of people that stretched onto the street. Smugly thinking that these plebeians could not hold the “exclusive” gold card, I marched up to the next floor, only to be told that the people in line were indeed “exclusive” gold card members. I did not bother to pick up the gift.
Worse was to come. A little research showed that there were more “gold” cards than “regular classic” cards, and so the gold cards weren’t exclusive at all.
I also found that your credit limit, which ultimately is what matters, has nothing to do with the colour of your card. For example, it is entirely possible for a classic card to have a higher spending limit than a gold card. So, in fact, gold card holders are paying higher fees not for better banking facilities, but for vanity. Since that day, I have held classic cards, which HSBC assures me are no longer being issued. One day, I hope to be the only one carrying such a card, which may then be elevated to a “Unesco Heritage Card” as well as being part of the “collective memory of Hong Kong”.
But the misrepresentation of credit cards does not stop there. Banks employ tactics that would attract the attention of the Consumer Council if they were used by a yoga or fitness studio. Gold cards are old hat now; the flavour of the month is platinum or even black cards (the latter must signify the sorrow resulting from buyer’s remorse). Ask about a platinum card and you will be told that there is no annual fee for the first two years. What happens after that? Apparently, the fee will then be HK$2,000 – but it will be waived if you call the bank and “request” it. By contrast, I pay HK$220 a year for my classic card. Why such a devious fee waiver plan? Are banks planning for an ageing population who forget to ring? If Hong Kong had a regulator that put the interests of the customer ahead of the industry’s, it would be the banks calling consumers to see whether they were willing to accept a fee for a card given “free” two years previously.
Hong Kong has good protection for electrical goods and gadgets via the Consumer Council, which tests them and names and shames unsafe brands. But the bank regulator, the Monetary Authority, seems to be a classic example of “regulatory” capture; it listens to the banks about what is “good” for the customer, not to the customers themselves.
I have had a relationship with the city’s biggest bank for some 27 years and, in that time, I’ve seen it go from a bank providing services that customers want to one trying to unload what it has decided is profitable. This is a sure sign of a company in decline. I am supposed to be a “premier” customer but, at its head office, the queues actually move faster on the floor below where “non-premier” customers are served. Occasionally, staff even suggest that I go downstairs to get served quicker.
I also get letters from “relationship managers” who change so frequently that a better name for them would be “one-night-stand managers”. Their main purpose seems to be to persuade me to buy in-house mutual funds with 2 per cent upfront commission. Yet, I have mobile apps that allow me to buy similar products not just in Hong Kong but also in the US and Europe with zero commission. Naturally, the bank operates on the basis that customers are ignorant Luddites who do not know you can trade across the globe.
It is about time that the mandarins at the HKMA were forced to set up a powerful financial ombudsman, with representation from the little old ladies of Sham Shui Po, to find out what the customer wants and provide those services efficiently and cheaply. Otherwise, with tech-savvy young consumers, the big banks of Hong Kong will become marginalised like some of the former giants in the US – think AT & T and General Motors, to name but two.
N. Balakrishnan is a Hong Kong-based businessman