Can I have some money please Dave?

Financial Services Team Blog

Mishaal Husain

For those of you who haven’t seen popular channel 4 television series ‘Bank of Dave’, it is about one man’s dream to start his own local “bank” for local people through practising simple banking methods.

Dave Fishwick, a former DJ and self-made minibus-retailer felt he could do a better job than the banks we see on the high street. He managed to pursue this by turning an old flower shop in Burnley in to the ‘Bank of Dave’. His “bank” specifically aims to help members of the community who are unable to borrow money from the giant banks, either because of the credit scoring system or the banks’ unwillingness to fork out. This is done though offering loans and a peer to peer lending scheme. Not only this, but his profits are then given to community charities – a true Mother Theresa of Burnley!

Dave isn’t allowed to actually call his “bank” a bank (hence the speech marks) as the essential banking license has not been obtained – a somewhat impossible task for those who aren’t a billionaire. This highlights how difficult it has been made to give the banking sector some competition. The latest bank to be given this license in a very long time is metro bank in 2010, which had to wait 18 months from when they submitted their request. Therefore, Burnley Savings and Loans (the real name of Dave’s “Bank”) has to operate under a different title but still fulfils the main banking needs. At the moment, Dave’s “bank” is a little too popular and there is a two year waiting list for the local people to deposit in to it.

While this all sounds very utopian, the Financial Services Authority (FSA) are not as convinced. The latest episode, ‘Fighting the fat cats’, shows Dave receiving a letter from the FSA asking him to stop taking savings from customers because of his ‘unregulated collective investment scheme’ or he could risk the permanent closure of Dave’s “bank” or even imprisonment. The episode captured an infuriated Dave but he did not take this news lying down. He managed to make enough noise through campaigning, media attention and mingling with some supportive MPs to achieve a David and Goliath victory – a happy ending to the episode.

I cannot believe how quick the FSA were to regulate and punish Dave’s “bank” when they have been much slower and less enforcing to the countless wrongs our high street banks have done – PPI, Libor rates and so on. If anything, they have made these giant banks invincible by labelling them as “too big to prosecute” (Andrew Baily, FSA) and we have little choice but to be subjected to their terms, conditions and even their failures.

Personally, I feel Dave’s banking idea is simple yet effective, but could only work in a small community where people know each other as there is an element of trust involved, for instance; a ‘community bank’ would have to be selective in who they give out loans to. We must remember people are putting in their life savings and some sort of regulation is needed to ensure that their money is looked after properly. Whilst Dave makes sure of this in Burnley, how can we be certain that if he was to roll out his banking model across other towns, that the next ‘Dave’ would be as good?

In today’s economy, I think we should welcome new ideas to help small businesses get started and if our high street banks would rather pocket their obscenely large bonuses than help us, then we should count ourselves lucky Dave is out there to lend us some much needed cash. If the FSA can work with these ideas to come up with new regulations that fit the model Dave is proposing then this could potentially be a success.

For those of you interested in ‘Banking on Dave’ or want to learn more, here is the link to Burnley Saving and Loans Ltd set up by Dave and co: