Let down by your bank? Here is what you can do about it

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A new report shows widespread dissatisfaction among young banking customers. But you don’t have to put up with poor customer service – here’s how to complain, and what you need to know about switching banks

Iona Bain

So the Olympics are finally here, and stories about inspirational athletes have come at just the right time to provide a distraction from our ailing economy.

Continuous coverage of the sporting extravaganza has also taken attention away from our dogged banks, who’ve been suffering a horrible year thanks to a string of IT failures, mi-selling scandals and accusations of immoral behaviour.

They’ll be sighing with relief now that the British public have temporarily lost interest in banker bashing (we’ve already won the gold medal and beaten the world record for that sport). But for many of us, the sheer day-to-day drudgery of banking can’t be forgotten about and we‘ll continue to rail against shoddy customer service and a lack of decent products.

Young people are often accused of apathy but many are very angry with the status quo. I helped contribute to a new piece of research on young people’s financial habits and attitudes. The survey of over 2,000 young people, conducted by the financial PR company MRM, shows that four out of five young adults would never recommend their bank to a friend.

The main reason that young people were dissatisfied with their banks was a lack of flexibility in their opening hours – one in five had visited a branch only to find it closed.

One in ten customers also failed the banks’ draconian identity checks when trying to access their own accounts. I have also fallen foul of these stringent measures when I have asked my Dad to help me with complicated banking issues during busy periods in my life. Never again.

A further one in ten have even hung up while on the phone to their bank, frustrated with poorly trained customer service staff (often based abroad and speaking broken English) and being put on hold endlessly.

With such a charge sheet of complaints, you would think a large swathe of young customers would voice their dissatisfaction or vote with their feet. Sadly, we are not nearly as good at complaining to the banks themselves as we are at bitching about poor service on social media or to our friends!

But if you feel you’ve been treated badly, you CAN make an official complaint.

Phone your bank, state what your issue is and what resolution you’re looking for (a remedy for the problem, a refund, an apology or compensation). If this doesn’t work, you can email the bank’s customer service department. Always be succinct, polite and courteous when setting out your issue. Keep a note of what is said in all phone calls and correspondences. If nothing else works, you can complain to the Financial Ombudsman, who will independently adjudicate on the matter – the important thing is not to give up until you have heard the Ombudsman’s verdict. Check out the FOS website and if you have to take this path, you’re not alone. The regulator receives hundreds of thousands of complaints from customers every year, and an alarming percentage of them are upheld.

If you have a gripe with your bank, take to Twitter, Facebook or your other social networking channel of choice. Most banks are trying to resolve issues and improve customer relations by being active on social media. The idea is that customers can get a swift resolution to their problem and they won’t have to hear a second of cheesy jazz as telephone hold music.

Sadly, the MRM report shows that only 7% have taken this route, and contrary to what I’d expected, only 3% actually had a problem solved this way. Clearly, we (and the banks) aren’t as tuned in to the technological revolution as might be expected.

There are no official figures on how many young customers have lost patience and switched banks since the big scandals broke this year. Generally speaking, ethical banks and mutuals like the Co-op and Nationwide have reported a huge spike in applications for their current accounts. Smaller building societies, which are accountable to their members and have strong ties to regions where they are based, have reported a similar upsurge in popularity – though only a handful of the bigger players offer current accounts.

There are juicy incentives for young customers to switch as well. First Direct, which often wins plaudits for its customer service, famously offers £100 to customers who switch, and another £100 to those who decide they aren’t happy with the bank six months later. A few months back, I got £200 by switching to the Co-op current account online, though it was a very limited offer, and I had to wait until I had paid in a minimum £800 a month for three months to receive my windfall. Some banks, like Halifax, also promise to pay interest on your current account, which might seem like a no-brainer if you tend to be in the black.

But hold your horses. Many of the interest-paying options require you to put in a certain amount of money every month, and pay a fee if you want any kind of a free overdraft.  If you don’t have a free overdraft, expect hefty charges if you dip into the red. Accidents happen, and you’ll be kicking yourself if you end up paying more in charges than what you earn in interest due to a massive purchase or a late payment in.

Also, don’t be tempted by a packaged current account that levies a monthly charge. They say there’s no such thing as a free lunch, but at the moment, you certainly don’t have to pay for banking if you don’t want to. Moreover, a free current account won’t come with the silly products often thrown in with packaged accounts to justify the fee. For example, some customers have been drawn to the promise of discounted home buildings insurance in the past, yet they’ve not been eligible to claim because they live in rented property!

Switching banks should be much easier than it is. Yes, both banks in the process are supposed to do what they can to help transfer standing orders or direct debits, but things go wrong far too often. The customer has to step in and make sure no direct debits are forgotten about. The Payments Council, prompted by the Independent Banking Commission, is set to change this by September 2013, making the whole process automatic, as well as trimming the timeframe for this process to seven working days. It should mean less hassle for the consumer, giving them more motivation to switch banks and making the whole banking sector much more competitive. Plus, those packaged bank accounts that charge a monthly fee will be tightened up by the regulator so nobody is mis-sold any useless products.

Sadly, the proposed improvements to packaged bank accounts are still at the consultation stage.

Until things change, proceed with caution. Ask yourself whether trust has really broken down with your bank and if there is anything better out there, either in terms of switching rewards or potentially better treatment. Then, thoroughly investigate all the providers on the market, including building societies, and look primarily at overdraft terms, their reputations for customer service and whether their more attractive accounts actually carry a fee – these factors affect you more than anything else. If you decide to take the plunge, be prepared to watch your bank like a hawk. Make sure you receive confirmation that all your direct debits have been switched and if not, chase up your original bank for a response. If anything does go wrong, such as an overdraft charge occurring after a direct debit hasn’t been switched, complain – the banks involved haven’t done their job properly and your persistence will pay.

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