The banks make too much money and debt collection salaries in Norway are 1,000 percent higher in Norway than in Finland, writes the Consumer Council. Is it true? In a column in Ytring, director Inger Lise Blyverket in the Consumer Council hammers away at both debt collection companies and banks. She believes debt collection companies and banks are fooling themselves and that the banks are speculating that customers will not switch banks. She concludes it all by saying that “If the banks hadn’t already been banks, the shareholders could laugh all the way to the bank.” Here she hits the nail on the head, but perhaps not quite in the way she thought. Anyone can become a bank shareholder, Blyverket, you and me. Then we own our share of the profits that the Consumer Council believes are far too high. But still, there doesn’t seem to be a queue at the door at Oslo Børs to buy bank shares. The explanation is partly that there is no super profit in the financial industry, and partly that recent times have shown us that owning a bank is not completely risk-free. Banks have failed in the US and Switzerland. The depositors got their money back through various guarantee schemes, while the shareholders and the professionals who had lent money to the banks lost all or part of everything they had put at their disposal. Now, fortunately, Norwegian banks are solid because they operate soundly and with good banking skills, and are closely monitored by Finanstilsynet. It is the banks that have set the stage for competition. Blyverket is rightly proud of Finanportalen as a comparison service. But the banks in Norway have made an even more important contribution to increasing competition. We have created the “consent-based loan application” service together with the Swedish Tax Agency, the Directorate of Digitization and the Brønnøysund registers. Where Finanportalen shows signal prices, the bank is required by law to carry out an individual assessment of each individual customer before setting a loan interest rate that is in proportion to the risk of the individual customer. That’s why the industry has created a “consent-based loan application” that means you don’t have to spend time finding the information the bank needs. With one click in one box, you give the bank consent to collect all the necessary information from the Tax Agency. It actually doesn’t get any easier to find out exactly what interest rate you can get with the individual bank. Competition in the banking market is fierce. We have well over 100 banks, large and small, national, regional and local, everything is ready for competition. Are the banks making too much money? Let’s look at the Consumer Council’s claim that the banks make too much money. We are now in a period where interest rates are rising. In such periods with a lot of dynamism, we can get some short-term results. The loan interest rate may increase out of step with the deposit interest rate due to statutory conditions, and the banks may have different interest rate change dates which cause differences in the quarterly figures from bank to bank. To assess the banks’ profits, we have to look at the figures over time. And fortunately objective and credible sources have done that. In a technical article on Norges Bank’s website, Norges Bank asks the question: Do the banks earn too much money? Anyone who wants to can read all the arguments and target figures by following the link. Here we can only make room for the conclusion, which is that Norges Bank’s analysis does not find any indications that Norwegian banks make too much money. On the contrary, it is argued that if the banks had earned less, the first-line defense against losses would have been weaker and the risk of banking crises would have been higher. Furthermore, lower profitability will make it more difficult for the banks to raise the necessary equity capital, which in turn would have to lead to higher profits. Is debt collection 1000 percent more expensive in Norway? “For example, the Consumer Council sees no good reason why two rounds of payment reminders should cost from 40 to over 1,000 per cent more in Norway than in Finland,” writes Blyverket. And she believes that the debt collection industry makes a fortune from other people’s misfortune. According to Intrum, which runs debt collection operations in both Finland and Norway, each payment reminder in Norway can cost a maximum of NOK 35 in fees. In other words, two reminders are NOK 70. In Norway, it is also the case that in practice it takes about three months before an unpaid claim goes to the Bailiff and salary deductions can be introduced, for example. In Finland, the rule is a maximum of 5 euros per payment reminder, higher than in Norway, and the claim will often go to Finland’s equivalent of our bailiff after only 14 days. And it should not be a goal for us as a society that more cases end up with the bailiff, as this burdens the taxpayers. I would like to see how Blyverket has calculated that the debt collection companies in Norway will be paid 40-1000 percent more for two payment reminders in Norway than in Finland. There is something about the tone. The Consumer Council uses rather heavy shielding when the director describes banks and debt collection companies. I think it can be counterproductive. It can give us a feeling of powerlessness. My advice to consumers is to care less about attributing motives to the financial industry that it does not have, and rather coolly exploit the competition that this market is characterized by. Because on one point the Consumer Council is right: We must be active consumers. Check at regular intervals what conditions you can get on your banking services, just as you are active in many other markets. If you find better terms, take it up with your current bank or switch. Follow the debate:
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Hooray, the banks are making money! – Speech
