High street banks don't deserve your loyalty

Published by Jeff Prestridge on 10 June 2014.
Last updated on 10 June 2014


I think the big high street banks have had it far too easy for far too long in this country. And I believe it's high time we downtrodden customers fought back and told them where to go.

For years these banks - you know who they are - have managed to maintain a vice-like grip on the financial services market while providing customers with mediocre service.

They've mis-sold financial products by the bucket load, often provided rank bad financial advice in the branches and treated our complaints with an attitude bordering on contempt – while paying their bosses fat bonuses.

Having rescued the biggest of them from their follies of the 2000s, they are rewarding us by pushing up overdraft rates and closing down branches in communities where the bank is often a vital cog in the running of local affairs.

Loyalty? The bank bosses don't know the meaning of the word. Treating customers fairly? Not in a month of banking Sundays (perish the thought: few big banks would entertain the idea of opening a branch on a Sunday). Given their failure to value loyalty, I don't see why you should be loyal to them. It's time to switch your current account.

Although Barclays, HSBC, Lloyds and Royal Bank of Scotland continue to dominate the consumer banking landscape, a new breed of consumer-friendly institution has emerged to breathe competition into the sector.

And they're being allowed to breathe because of new rules introduced late last year to make current account switching a far less daunting ordeal than it previously was. Under the Current Account Switch Guarantee, you can now switch without fear of direct debits, salary payments and standing orders going astray.

I would be exaggerating if I said there was a rush among customers of the big banks for the exit doors but there is no doubt that more people are moving as awareness of the Current Account Switch Guarantee improves. According to independent experts, 60% of the public are now aware of the new guarantee, with switching levels hovering around the 4% level. From small acorns grow big oaks.

Customer service

All the data suggests that the traditional high street banks are losing accounts because of customer service issues. According to researchers at TNS, which has been monitoring switching patterns since late last year, NatWest and HSBC are among the biggest losers.

HSBC, for example, has suffered a net loss of current account customers every month since the new guarantee was introduced – NatWest has suffered similar net losses every month bar one. For those switching out of HSBC, a third cite customer service issues.

Of course, not everyone is switching to a bank they think they can trust more. Santander, a bank once renowned for poor customer service standards, has won considerable business because of its attractive 123 current account that comes with credit interest. Other banks have won market share because of their willingness to pay higher rates of interest on current accounts than on savings accounts.

Also, some of the new 'challenger' banks have come a little unstuck – the Co-op for example.This is a bank that had the overwhelming trust of its customers until it was hit by financial difficulties and was forced to be bailed out by American hedge fund managers.

Yet it's notable that the likes of Nationwide Building Society, Metro Bank and First Direct have all made strong headway in recent months because of their commitment to top-notch customer service.

According to the latest current account opening survey conducted by analyst Satmetrix, more than three quarters of Metro Bank's new customers are sufficiently impressed by the quality of its service that they are happy to promote it to friends. Only First Direct comes anywhere near it.

New website Fairer Finance identifies Nationwide, Metro Bank and First Direct as the best current account providers by 'fairness' to customers.

It's no coincidence that these three, along with Coventry Building Society, the Co-op's Smile and Australian owned Yorkshire Bank, form the shortlist for 'most trusted current account provider' of the year in the Moneywise Customer Service Awards 2014.

Yes, there really are banks out there you can now trust. I never cease to be amazed.

Jeff Prestridge is the personal finance editor of the Mail on Sunday. Email him at columnists@moneywise.co.uk

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