Any alternatives to Dogs and Vomit?

After much apocalyptic huffing and puffing last year, which involved touching each one of us for three grand a taxpayer to bail them out, UK Bankers seem to be back to business as usual. Holy Scripture (Proverbs 26:11) suggests that it is the nature of dogs to return to their own vomit, and sows, having washed, to go back out there and roll in the mud. Nick Baines reflects some of the anger and frustration many feel at all this:

Let’s get this straight. Some of my friends are bankers. I don’t have a problem with bankers getting paid for the work they do. Some bankers should get paid more than others. Big bankers should get paid big salaries. But bonuses should be rationalised and spread about the people who work at all levels of the business. How do you justify a single individual getting a one-off (almost guaranteed each year) payment amounting to many multiples of what the ordinary bank staff earn in several years? And whose money is it that they are playing with anyway?

It’s certainly a shame if a good crisis has been wasted.

One development I will be watching this year, after discovering philanthropic microfinance through Kiva, is the growth (or not) of Zopa. Billed as the “eBay of banking,” this is a microfinance site that enables people to borrow or lend directly with minimized middleman profiteering. Risks are potentially higher, but not perhaps by as much as you would think, and returns rates have held up much better than convnentional banks in the past year or so. For a small investor, there’s more flexibility and returns are substantially higher than anything you would have got last year from the UK high street with its pathetic levels of customer satisfaction, up t0 20 point differentials between bank rate and their rate, and fat markups for the fat system.

As ordinary low-risk borrowers and lenders increasingly use microfinance sites, what’s holding back change? Personal inertia — apparently disgruntled Brits are more likely to change their partners than their banks. Also Brits are not currently awash with cash, being legendarily more inclined to borrow than to save. Finally, the UK tax régime around savings income isn’t (yet?) favourable to such direct ways of saving — or indeed any ways of saving?

However, the times are a’changing, and if direct lending sites, presently a bit of a joke, develop, the Drones Club with its fat bonuses and useless customer service could be begin to experience an interesting run for our money.