RBS crowned Least Trusted provider - again
RBS has been named least trusted financial provider for the third time in four years at the Moneywise Customer Service Awards. The troubled bank suffered the same fate last year, and in 2012.
Most recently RBS customers have been blighted by an IT failure that resulted in 600,000 of them see money go missing from their current accounts. Customers from across its network of brands were affected - including NatWest, Royal Bank of Scotland, Ulster Bank and Coutts. Adding insult to serious injury, the bank sent automated messages to some of those concerned informing them they had been charged for using unauthorised overdrafts.
Moreover, back in May the bank reported a loss of £1.3 billion after misconduct and restructuring charges took their toll. It was fined £334 million for rigging the foreign exchange market and it had to put aside a further £100 million for settling mis-sold payment protection insurance (PPI) policies.
Failure across the board
However, the bank's fate in this year's awards was sealed long before these latest scandals hit the headlines. While a lot of Moneywise readers told us they took objection to its poor corporate reputation, most complaints were of a more personal nature.
For instance, one very unhappy former customer told us: "My mother took out a two-year bond at 5%. When she did not receive the first interest payment she went to our local RBS branch to find out what had happened. They had failed to send the paperwork away and so the bond had not been opened.
"RBS refused to honour the two years at 5% and would only give us a year at 5%. When we went in to get the money out to go into another bond after a year they then tried to charge us a £10 withdrawal fee. We complained and they did waive this, but I would never take out a product with them and advise all my friends not to do so. I think the way we were treated was appalling."
Another told us that they had an account closed without notice or any explanation being offered. They described their experience of trying to get to the bottom of the matter with customer services as coming up against "a brick wall".
In the personal loan category, it was RBS's NatWest brand that was named worst provider – again let down by its competitiveness of rates. Currently, a £10,000 loan over four years comes with an interest rate of 4.9% APR, which would cost customers £229.84 a month, or £11,032.33 over the full loan term.
By comparison, the cheapest loan available through Moneywise.co.uk/compare at the time of writing was Nationwide's personal loan charging 3.6% APR. Over the four years it would cost £224.01 a month, or £10,752.24 in total. That makes the NatWest loan £280 more expensive than the Nationwide version.
However, in the last banking category, RBS group was spared a further public flouting. Vanquis Bank was named the least trusted credit card provider, with its lack of rewards and high APRs (currently as high as 39.99%) aggravating many voters. One Moneywise reader said of the company: "They are rip-off merchants, with terrible rates of interest and they prey on people who have been in debt."
Payment protection insurance is designed to cover you should you fall ill, have an accident or lose your job and can’t make repayments on loans or credit cards. However, research by consumer watchdogs found the cover to be overpriced, filled with exclusions (policies exclude self-employment, contract employees and pre-existing medical conditions) and were often mis-sold because the exclusions were never fully explained. In May 2011, the High Court ruled banks had knowingly mis-sold PPI and ordered them to compensate around two million consumers.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.