Thousands switch accounts away from Scottish banks

Less generous perks and closures see customers look for better deals

THOUSANDS of customers are ditching Scottish banks following a wave of cutting interest rates, reducing perks and axing bank branches.

Scots banks have been among the hardest hit as current account users swap to others providing a more favourable service.

The Royal Bank of Scotland group comes close to the top of the list of Scots losers with a net loss of 9,162 accounts in the three months to September 30, 2016.

Barclays recorded a net loss of 21,008, while other Scottish banks that faired badly included the Clydesdale and Yorkshire Banking Group which saw a switching loss of 7,716.

It comes as it was estimated that Britain’s biggest banks were axing an average of eight branches per week – leaving many communities without face-to-face banking.

One study found that some 437 branches are set to close this year on top of 1,420 branch closures already announced over the past two years.

RBS, which includes NatWest, was closing the most branches this year, at 158, while Lloyds, which owns Bank of Scotland and Halifax, had announced 100 closures between July and October.

Clydesdale and Yorkshire was axing 79, HSBC 62, and TSB 38.

Several current account perks were made less generous by providers around the end of 2016 and the start of 2017.

In August 2016, Santander announced a three per cent rate on its flagship 123 current account would be halved to 1.5 per cent from November 1 2016.

It said the changes were due to “the market expectation of interest rates staying lower for longer”.

Other cuts that have since come into place include Lloyds Bank cutting a rate from four per cent to two per cent and TSB reducing a rate from five per cent to three per cent.

Halifax dropped its £5 monthly reward payment on its Reward current account to £3 in February.

Edinburgh-based Tesco Bank has bucked the downward trend by guaranteeing to maintain a three per cent rate until April 1 2019, while Nationwide Building Society continues to offer a five per cent rate.

Earlier this month RBS and NatWest decided to slash the rate of cashback for Reward current accounts customers from three per cent to two per cent from June.

They are also introducing a hefty minimum monthly deposit requirement of £1,500 for new customers.

A spokesman for RBS said: “There has been a significant reduction in the number of people switching away from us.

“We are constantly looking to improve our service to customers.

“We recently introduced a new feedback system to listen directly to our customers and act on their feedback.

“Our Reward account is our fastest growing, with over 1.7m customers benefiting from over £100 million in Rewards since it launched.”

Across the the UK, some 248,302 switches took place between January and March 2017 according to payments body Bacs, which oversees the current account switch service.

This was higher than the 208,387 switches that took place between October and December 2016.

The biggest winners were Halifax, which made a net gain of more than 28,000 current accounts being switched to it between July and September 2016.

Nationwide gained just under 26,000 customers who moved their accounts.