Why is Santander's service so poor?

Published by Jeff Prestridge on 01 December 2010.
Last updated on 28 June 2011

keyboard frown

For the past few months, I've been up to my ankles in complaints - not of my own making, I hasten to add. I've never received such an angry barrage since I asked Financial Mail readers fortheir views on the Post Office's controversial decision to axe 2,500 branches in 2006.

This time the complaints all centre on the administrative incompetence of the Spanish-owned bank Santander. The bank has established a massive presence on Britain's high street through its takeover of Abbey (or 'Shabby Abbey' as it was usually referred to), and more recently the acquisition of credit crunch-impacted Alliance & Leicester and Bradford & Bingley.

In more than 20 years of reporting on personal finance issues, I've never witnessed an administrative meltdown quite like that which has taken place at Santander.

In its defence, the bank has gone through the difficult process of amalgamating three savings books onto one administrative system. Such an exercise is bound to result in teething problems.

But many of the Santander complaints have nothing to do with integration; they're about a bank failing to carry out basic banking procedures, such as opening new accounts in a timely fashion and honouring terms and conditions spelt out in the small print.

They're all about a bank that has clearly not invested sufficiently in its complaints handling, resulting in small problems becoming big ones as they fail to be resolved in a timely fashion. The result has been an absolute administrative shambles, with customers left angry, frustrated and many giving up and going elsewhere.

No wonder 2010's Moneywise Customer Service Awards (as voted by you) highlighted Santander as one of the poorest providers. Certainly, some of the complaints that have come across my desk have made my blood boil - primarily because the 'problem' should have been nipped in the bud, not left to fester like an open wound.

Wider problems

Santander has promised to sort out this administrative debacle - employing more staff and on-shoring all complaints handling - and I hope it does. But the customer service issues at Santander are symptomatic of a wider problem across the entire financial services industry. I'm talking about the propensity for most financial companies (not all) to put the pursuit of new business above all else.

Rather than investing in customer support and extending the
relationships they have with existing customers, most companies (banks are the most guilty) are only interested in the next sale.

Going back to our Spanish friends, it's no coincidence that while Santander has been angering many of its existing customers, the bank has been making big inroads into the current accounts market with the promise of a cash gift (and an attractive rate of interest) to new customers. Looking at it dispassionately, Santander has put the interests of new customers above those of its existing ones.

A better – and more sustainable – business model is one founded on two key pillars: the delivery of excellent customer service and building, and rewarding, long-term customer relationships. It's a model adopted by the likes of insurer NFU Mutual, building society Coventry and internet/telephone bank First Direct.

It's no coincidence that these businesses are all thriving despite the poor state of the economy (and were winners in the Moneywise Customer Service Awards).

We need less hard sell and more TLC from our providers of financial services. That's surely not too much to ask? I live in hope that we are on the cusp of a change – and that I will be able to see my ankles again.

Jeff Prestridge is personal finance editor of Financial Mail
on Sunday. Email him on

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