Current accounts in meltdown

Why the biggest names on the high street are being hit with a deluge of customer complaints

BANKS’ unfair treatment of consumers is triggering a new wave of compl ai nt s , according to exclusive research done by The Mail on Sunday. Analysis of cases taken on by the Financial Ombudsman Service in the nine months to the end of last year show that disputes relating to current accounts are now only second in number to those about Payment Protection Insurance. The service, which steps in when a customer complaint remains unresolved, has taken on more disputed current account cases in nine months than for the entire year to April 2018.

The rate at which the Ombudsman has found in favour of customers has doubled in a year – to an average 52 per cent. In the last three months the uphold rate has been 56 per cent. This means the service is asking banks to make amends in more than one in every two cases it reviews.

The deluge of complaints embrace everything from ruined credit ratings, unexplained account closures, mis-sold accounts, switching errors – and even one customer falsely recorded as dead.

TSB’s disastrous handling of its IT upgrade last year has inflated the figures. When TSB disputes get to the Ombudsman, it is siding with customers 90 per cent of the time. The bank has still to resolve more than 17,000 outstanding complaints relating to the IT meltdown.

Other banks are also being forced to pay redress or make amends to those affected by poor service, unfair actions or slippery sales tricks.

Barclays, for example, has been forced to compensate people who were persuaded to take out fee-charging accounts – even though their command of English was poor and they had little idea of what they were getting into. The bank was instructed to repay fees plus interest.

The same bank also mistakenly put a ‘deceased’ marker on a customer’s account, which caused his direct debits to be cancelled and prevented him from accessing his money. Barclays offered to pay £ 1,000 which the Ombudsman agreed was fair compensation. Barclays says it is working ‘tirelessly to achieve the right outcomes for customers’.

An increasing cause of complaints is the sudden closure of accounts. Banks are resorting to this tactic as they attempt to clamp down on money laundering, fraud and debt. Currently, there is no rule forcing a bank to reverse its decision even if subsequent evidence points to an error being made.

Separate data compiled by free complaints handler Resolver shows gripes about standard – not premium – current accounts are 11 per cent up year on year.

Like the Ombudsman’s data, sudden account closures are a big source of complaints as are issues surrounding power of attorney, fraud and disputed transactions. Martyn James, spokesman at Resolver, says: ‘Worryingly, we are still seeing countless avoidable complaints about bank accounts where simple errors are compounded by banks failing to address problems quickly and effectively.’

He also believes the closure of high street branches is triggering complaints.

He says: ‘ People complain about phone or online banking, but when you dig a little deeper, the fact their local bank branch has gone is usually the root cause of the trouble.’

UK Finance, which represents the banking industry, says: ‘Increased complaint levels are always disappointing, but the industry can now use this data to make improvements to the services i t provides and address complaints effectively.’

Figures from City regulator the Financial Conduct Authority show that 375,000 customers were dumped by their banks because of concerns around financial crime.

UK Finance adds: ‘ Banks must

adhere to strict legal requirements which may prevent certain information from being shared with customers. The finance industry is currently developing good practice principles on how banks should approach the exiting of customers’ accounts.

This would include recommendations on how banks would communicate this with affected customers.’

How customers are also failing to play by the rules

THOUGH banks are demonstrating bad behaviour, customers aren’t always blameless.

Many are employing claims management companies to argue they were mis- s ol d accounts even though they readily used the benefits they paid for.

Others with a Santander 123 account contacted the Ombudsman about the bank cutting the interest rate on credit balances while increasing its fee. This is despite the fact the bank was legally entitled to make this business decision.

One couple was upset because they were asked to repay debt they owed. Unsurprisingly, the Ombudsman has rejected all these complaints.

A repeated slip-up is when people switch to an account for the rewards on offer, but then fail to meet the qualifying criteria. Both banks and the Ombudsman are unlikely to rule in their favour.

Typically, rewards are lost because people did not transfer enough direct debits or they did not use the Current Account Switch Service.

This official industry-wide service automates the switching process – including the transfer of direct debits and standing orders – and provides guarantees should anything go wrong.

The idea is for consumers to change their main account to a new provider, rather than open a series of new accounts. Incidentally, complaints data shows that one customer’s switch was botched and as a result she experienced delays in accessing internet banking.

It took several calls and visits to the branch to sort out but the bank paid her £100 for the inconvenience – showing that under the terms of the Switch Guarantee, customers do get compensated for hiccups.

Time to find a new bank account

NO ONE can guarantee a bank will treat every customer fairly at all times – in part because they are large businesses with big customer service departments and errors are inevitable.

But customers do have control over the accounts they pick and the banks they decide to sign a contract with.

For interest on current account credit balances, consider Nationwide, TSB, T es co Bank and Santander.

Matthew Sanders, of comparison website GoCompare, says: ‘Some banks will pay you £150 just to get you on board.

‘Pay attention to the account terms as there could be minimum monthly deposits to meet and you may have to close your old account.’

First Direct and M&S Bank both offer interest-free overdrafts of up to £ 250 and £ 100 respectively. Nationwide and Santander offer more, but only on a temporary basis.

To find an account based on a bank’s complaints handling, customer trust and service, look at the ratings table on website fairerfinance.com.

Sanders adds: ‘If you’re looking for online services and travel perks such as cheap or free foreign exchange look at Revolut, Monzo, Monese, Loot, N26 and Starling Bank. These are the tech challengers to t he classic high street banks.’

To find out more about the Current Account Switch Service and the guarantees it provides, visit currentaccountswitch.co.uk.