/ Money

We deserve better banks

Better Banks campaign logo

Our surveys have once again found that the big banks aren’t getting customer service right. Standards aren’t being driven up across the industry due to a lack of competition, so today we’re launching a campaign calling for better banks.

Have you ever thought about your bank account and why you need it? Because you love banking? Life would be interesting if you didn’t have one. I suppose you could keep all your cash stuffed in the mattress and take a bit out to pay the gas man (except he doesn’t visit anymore).

So yes, everyone needs a bank account these days. And the banks know that. Maybe you don’t think about your bank too much – the money flowing in and out. But is that all we expect from our bank – somewhere to put our money and make payments? Surely there’s more that they can be doing?

Your bank can see when you’re about to go over your agreed limit, so why don’t they tell you? Some banks automatically text you the moment your payments exceed the limit on your account, and give you time to get your account back into balance before applying charges. But too often we see banks hitting customers with disproportionately large fees for unauthorised overdrafts.

And what about when you fail to pay a bill because your bank’s IT systems have gone down and you can’t get access to your money? Banks can do better and they know it.

Big banks struggling to keep up

So today we’re launching a campaign calling on the regulators, government and banking industry to get banks to listen to us – their customers. There’s a certain quality we can expect from any of our service providers and many of the UK’s biggest banks are struggling to keep up with their smaller rivals.

Some of the smaller banks are getting it right, like First Direct and Metro Bank. Their customers are the happiest, as we found in our latest survey of more than 20,000 customers. But a lack of competition means this isn’t driving up standards across the whole industry.

We want to put customer service in the spotlight for all banks. We want alerts, apps and other tools that would help us manage our money more easily. And we want unfair unauthorised overdrafts to be tackled too.

Sign our petition for better banks

The Competition and Markets Authority’s major inquiry into the current account market is due to conclude in the next few months, but we don’t think current proposals will reform the market. That’s why we’re calling for a collective effort from Government, regulators, and the banking industry to raise the standard of service we receive. And the competition inquiry needs to ensure that banks are held to account for the way they treat their customers.

We know that banks have started to change their culture in response to the mis-selling scandals of recent years, but now is not the time to congratulate them on a job well done. Sorting out the worst practices should be the bare minimum of changes we need to see to create better banking for customers. If you agree, please sign our petition and then tell us how your bank treats you.

[UPDATE 16 FEBRUARY 2016] – Two of the big banks have come out in support of our Better Banks campaign. Les Matheson, CEO of Personal and Business Banking at RBS and NatWest, said:

‘We agree that Britain needs better banks and that is why over the last few years we’ve been challenging the industry to help our customers out, not catch them out and we’re proud of how we’re making banking simpler and fairer for our customers.’

In response to our customer satisfaction survey, Les Matheson added:

‘Whilst we are disappointed in these results, we are determined to do more and we are working with Which? to support their campaign, including raising awareness and education of products – not just for our customers, but across the banking industry.’

Terry Kaye, Divisional Director for Customer Experience at Nationwide Building Society, said:

‘As a mutual, Nationwide is owned by and run for the benefit of its members meaning they are at the heart of what we do. The Society already has the highest customer satisfaction scores amongst its banking peers, but we aren’t complacent and are always striving to further improve the level of service offered to our customers.’


Like countless others I am in a quandary as whatI should do with a reasonable sum of money that has come my way. My initial feeling given the lack of confidence in all banks at present is to just stash it under my bed!!

Brian Hambidge says:
25 February 2016

Actually, Co-op Bank have always been very fair with me. That’s why I haven’t moved since they stopped being a co-op.
They are, obviously, not typical.

James Hyson says:
26 February 2016

Make sure the retail arm of banks is separate from the trading – that way the man in the street gets to keep his money, and the cowboys can make or lose a fortune gambling with corporate money, and who cares??

Barry Vass says:
26 February 2016

Does age and obvious financial activity not matter. Correspondence received is produced in a ‘blanket’ form. This regulatory anonymous way leaves us confused as to what/which to act on. Yet when approached my Nationwide Bank financial advisor is always avail. So why the need for persistent intrusion?

really its common sense, the majority of families on low income are suffering greatly an are under appreciated. Without the jobs they do the country would come to a standstill. Now the point is the bankers are using people’s money to reinvest in outrageous and also risky ventures. People could actually lose there money and have. So lets get things sorted its simple and easy to do it just means the bankers and politicians have to stop using there secret handshakes or refer to the wearing of the right school tie and work for the people in whom there voted in by, paid by and are ultimately employed by, yes you now us the British. public.

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We shouldn’t alarm people unduly. Holdings of up to £75,000 in any one bank, building society, or credit union [or in certain cases a group of such under a corporate entity] are protected by a statutory Deposit Guarantee Scheme [the Financial Services Compensation Scheme]. Nobody with less than this has lost any money as a result of a bank or building society insolvency or default.

It used to be protection of £85,000 and I heard that it might be further decreased from £75,000.

Yes – Since it’s an EU-directed scheme the limit is related to the exchange rate of Sterling to the Euro.


Richard Browne says:
28 February 2016

It’s the hidden charges that get you despite reading the small print !

The Nationwide declare their “hidden” charges very prominently on an information sheet that comes with every statement and also on the website. I am surprised if people get stung more than once . . . or if they do they can’t really complain.

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My Bank, Lloyds Plc has also been abusing the “Daily Rate” charges for mere slight surpassing of the Overdraft Limit.

Besides I am really furious that the “Big Guns” who may have facilities in several millions are given write-offs whereas small individuals with small facilities are harassed without limit and forever with more extortionate interest and charges.

Muriel Moss says:
1 March 2016

At any time of day or night ,weekdays and weekends it is impossible to speak to a real person with wait times 15mins. I am 80 yrs of age and need to have personal contact occasionally. I was advised to go on line, Applied and duly attempted to sign up using a keyfob style keyboard. That coupled with all kinds of questions and gonky letters to recognize made it very difficult.Phoned assistant who attempted to talk me through but was unable to sign me in. After many repeated attempts I gave up in tears. I complained at the expense of the length of call[most of morning] and was offered £10. I am not on line, unable to speak to someone and told to go to branch which is 12 miles away. Call this service from a bank with billions of pounds profit last year

Muriel, if this was not Nationwide, and they are not too far away, give them a go. I’ve had excellent helpful service from real people there over the years.

I’ve been with the Co-operative Bank for over twenty years and have only good things to say about them… notwithstanding the Paul Flowers debacle! Their customer service is outstanding, 24 hours a day, and I particularly like that it’s UK-based. Their ethical policies ( what they will and will not invest in) are excellent.

Iris says:
4 March 2016

RBS is in deficit to the tune of £2 billion of taxpayers money. This bank is a constant failure and should be consigned to history. Obviously the £millions they award themselves in bonuses for their failure, is part of that figure. The taxpayers money would be better spent on funding “expensive” cancer drugs, equipment and treatments – not given willy nilly to this bunch of incompetent banksters.

The trouble is, it is NOT just the banks. There are the power companies, TV companies, google, apple, facebook, ALL THEY ARE AFTER IS FILLING THEIR WALLETS AT OUR EXPENSE. For instance, I am waiting for a rebate for my over payment of my gas and electric, but because they don’t employ meter readers anymore, they say they cannot do it until they get an up to date meter reading, When they do get the meter reading, it then takes 28 DAYS to get around to it. They must be on a go slow, 28 days to pres press a few computer keyboard keys. They make me want to vomit.

I also forgot Microshaft.

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In the last four months I have received “Change” letters for each account I hold with Lloyds Bank. The last straw was the letter received on Thursday announcing “Change” to my current account. I have made an appointment at my local branch on Tuesday morning and this could well mark the end of a 50 year relationship. I am now making careful study of recent Which reports, so that I am well prepared for this meeting.

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It’s the only way in which many people will be able to raise a sufficient deposit put down on a home.

The government wants the house-builders to build lots more houses. They won’t build houses they can’t sell. So the government puts money in at the bottom of the ladder to lubricate the market. I can see the political objections [it boosts the builders’ profits] but it also does a lot of good and sometimes the ends justify the means. The money gets paid back in the long run, the number of available houses is increased putting downward pressure on prices, it is better than long-term renting, it generates employment, and it improves the condition of the nation’s housing stock.

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Buy a house as a home if you propose to settle – somewhere to live – and not as an investment. It’s better than renting unless you keep moving around.

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It is difficult to generalise about whether property is a good investment. A friend of mine bought a house in one of the less popular parts of Oxford and within about eight years the value of his house and others in the area had increased greatly. On the other hand, some homebuyers end up in negative equity, so houses need to be considered as long-term investments. That’s fine if you have a permanent job that you are happy with, but not everyone is lucky.

As soon as you view your home as an “investment” you can run into trouble – such as paying over the odds in the expectation of continuing price growth. Better to think that you are paying a monthly sum to live in your home. If it goes up or down in value it will only matter to you if you decide to sell. But it is generally better than buying a house for your landlord on which you gain nothing.

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An update for you: The Competition and Markets Authority (CMA) has delayed announcing findings from its investigation into the banking industry, originally started back in July 2014.

The CMA will now report back in August 2016, taking the duration of its probe well beyond the two year mark. The delay is due to the CMA wanting to ‘properly consider’ responses to suggested measures that will soften the impact of overdraft charges.

The CMA has, however, listened to our arguments on overdrafts and agrees that unauthorised overdraft charges need to be tackled. The remedies put forward include prompts and alerts for those approaching their overdraft, and grace periods to allow customers to avoid unarranged overdraft charges.
A lost opportunity

Still, the regulator hasn’t gone as far as we would have liked. It is not yet looking at requiring banks to charge the same fees for both arranged and unarranged overdrafts, for example.

Our executive director Richard Lloyd said:

‘This inquiry is now looking like a lost opportunity to deliver better banking for consumers. We are disappointed that the CMA appears unwilling to take action to control unfair, punitive charges faced by unauthorised overdraft users. More information and prompts are simply not enough.’

‘The regulator should use this further extension of their inquiry to bring forward stronger solutions to tackle unfair charges and ensure banks are held to account for how they treat their customers.’


“charge the same fees for both arranged and unarranged overdrafts”. “Unarranged” means “unauthorised” – not agreed to. If a bank does not agree to you having an overdraft it may well believe you are a greater risk of not repaying. So why should it charge the same fees as for those who have arranged an overdraft and will be reliable payers?

We should not reward people who take money from banks without agreement. It is like taking money out of your mum’s purse, or your friend’s wallet, without them being asked. Less than honest.

A rare slip is one thing, and discretion should be used in those cases. But otherwise I am surprised and disappointed that a consumer group whom many respect should condone effectively taking money without consent.

I agree Malcolm. It is so much easier to arrange an overdraft than it ever used to be so there is no justification for the charges to be the same for authorised and unauthorised overdrawings. The reason that many people do not apply for an authorised overdraft is that they expect to be declined, or to have one offered on special terms. There is a risk that if the CMA tries to get the banks to equalise the fees the authorised facilities attached to most current accounts will be withdrawn altogether which would be bad for consumers generally.

There seem to be three levels of overdraft limit. First there is the authorised level that comes with the account and is virtually automatic; that might be £200-300 and allows for a bit of cashflow mismanagement. Second is the ‘unauthorised but not stopped’ level which is probably personal to the customer and pre-set in the system so that debits will not be blocked; this could allow double or triple the debt and would trigger penalties but still allow the account to function. And there is a third level which is the absolute limit of the bank’s tolerance and will result in cheques being returned and direct debits not being executed. What customers probably don’t know is the bandwidth of the second level and the point at which blocking starts with the very high charges that result for returning cheques or for stopping standing orders and direct debits [and these in their turn might invoke penalties from the creditor for default e.g. a credit card company]. And what also might not be appreciated at first is that any higher interest rates will apply to the whole of the overdraft for as long as it takes until the account is back in credit. After that point the bank might review the account and set new tighter limits at each level.

I think there needs to be much better information and education about how banking works so that people are aware of what will happen next and are warned about the compounding effect of going past the pre-authorised limit.

The bank can see which customers could repay their overdrawing quickly by virtue of their income and any savings with the bank and might allow those customers a bit more leeway. For customers where the bank has little knowledge or the account profile is always close to the edge then the limits will no doubt be tightly set and monitored. What the CMA needs to do is examine how fair and proportionate these charges are and whether the basis for them is reasonable or extortionate.

Hello Malcolm, you’re right that unauthorised does mean not agreed to. However, the bank is allowing you to access these funds. It could simply say no – as it can do at an ATM or when it fails to process a payment due to insufficient funds (and charges you a punitive unpaid item charge). The bank sees that you are using an unauthorised overdraft, and while a rare slip up is one thing, a bank might see someone do it again, and again, and yet continue to authorise them taking that money. The bank is giving consent, and can then charge higher fees for doing so.

A fair comment (of course) patrick. The banks I have experience of block payments if they will take you into an unauthorised overdraft, or exceed an existing arrangement. One view would be to block all unauthorised overdrafts after a first or second slip. I’d like to see banks trying to help customers with their financial planning (if customers respond to offers of help) but I do not think they do their customers any favours by allowing them to spend beyond their means.

I still believe we should not condone unauthorised overdrafts, apart from rare slips, rather than judging the banks’ charges as if these are a normal part of a bank’s role.

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It would not happen if people managed their finances better and avoided going into the red. Or if they had an overdraft agreement with their bank.

It is reasonable to assume that most people with bank accounts do not slip deeper and deeper into debt; in other words their income equals their outgoings. Therefore it is likely to be about the timing of payments going out and income going in. Adjusting the timing of payments and if necessary having an agreed overdraft to cover unavoidable timing differences should address the problem. If the bank can see that income does equal outgoings then I see no reason why an agreed overdraft should not be set up. So talk to your bank and reach a responsible arrangement.

By the way Which?, will you please continue sending me regular copies of the magazines if my direct debit fails to pay up. 🙂