We no longer support this version of Internet Explorer. Please update your browser for a better experience of All4.com. For more information visit our FAQs

Section navigation

Dave's Story - Text Version

What is a Bank?

Answers on a postcard if you know, because there is no definition of a "bank" in the Financial Services and Markets Act 2000. The FSA (Financial Services Authority) does, however, publish a list of regulated firms which businesses and the public would think of as 'banks', similar to that which the Bank of England (until May 1998) and the FSA itself (from June 1998 until November 2001) used to publish under the Banking Act 1987.

In the past 100 years there has only been one new high street banking licence granted in the UK  to Metro Bank in October 2010.

Banks aren't the be all and end all. If you're looking to borrow, or have money to invest, there are other options both on the High Street and online. It is worth noting that moving away from deposit - which in essence only banks can take on a commercial scale - you move out of the realms of the financial services compensation scheme where customers' deposits are guaranteed by the state. You move into the realm of different types of investment, where in theory customers' money is more at risk.

Learn more about regulations and discover the alternatives here

++How Dave Took on the Banks

50 billion

How could the banks LOSE 50 billion?

Self-made Burnley businessman Dave Fishwick couldn't get his head round it.

He could see the impact everywhere. To Let. To Let. To Let.

Homes repossessed, the facts:

'40,000 Homebuyers Lose Property', The Guardian, Feb 2009

'Repossessions Hit 14 Year High', The Guardian, Feb 2009

Empty shops. Empty buildings. Businesses going bust.

Source: Bank of England Trends in Lending April 2012

Meanwhile in Banker-land Farquhar and Tristram were still collecting their millions in bonuses when all they should have been collecting was porridge.

'In 2010 city bonuses totaled £14bn, up from £12bn in 2008', The Guardian, July 2011

It wasn't right. And the more he thought about it, the more he realised the whole banking system wasn't right. And he was going to prove it. He would open "bank".

See how the word "bank" is in inverted commas? That's because the regulatory requirements to set up a bank are complex and highly technical. It's designed to protect the public, but you wonder sometimes if it's not really designed to protect the banks.

A tiny, tiny "bank" that would do things better.

But, as well as all the difficulties Dave had factored in: the kind of hurdles you face when launching any new business - let alone one as ambitious as a "bank" - there was one rather big obstacle in his way.

One which could essentially kill his whole idea before he'd even started - he didn't have a hope in hell of being allowed to call his "bank" a "bank".

He would lend to the little guys.

The facts: In early 2011 the government launched Project Merlin, an agreement with the Big Four clearing banks (Barclays, HBOS, Lloyds Banking Group and RBS): The banks would lend £190bn to businesses during 2011.

In February 2012 the Bank of England's official assessment of Project Merlin found that the banks had amazingly exceeded their £190bn target by £25bn. but... The £74.9bn that was lent to small businesses was astonishingly £1.1bn short of the agreed target. Which wasn't quite so amazing.

For a long while it felt like all that banking badnesss had been forgotten but then the Barclays Libor scandal emerged:

'Barclays faces fresh scandal over interest rate swaps: Watchdog to rule on claims that small businesses were crippled by penalties'

Source: Independent, June 2012

He would only lend responsibly.

He wanted to give people decent interest on their savings of 5%.

Even though the big banks were offering less than 1%.

With some interest rates offered as low as 0.05%. You may as well keep your money under your mattress. £1000 would only earn you 50p a year. Less than your bus fare to the bank!

And he'd do something the big banks wouldn't dream of.

He'd give all the profits to charity.

The whole idea behind this was to open a "bank", or a business able to do lending akin to what banks do, with the interests of the community at its heart.

There would be no wasting money on expensive nonsense. And no bonuses because this "bank" business would be about giving. Not taking.

Well thats the theory...