/ Money

Banks CAN be better – now’s the time for transformation

Broken money bank

Are you satisfied with your bank or could it make changes to improve the service you get? We think banks have a lot of work to do, so we’re calling on the regulator to take action…

Most people’s day-to-day relationship with their bank centres around their current account. At least 94% of us have one, and if you’re like me, you’re still with the same bank you joined when you went to university.

Despite that free railcard offer running out over a decade ago, I’ve never bothered to switch – and I’m not alone. There’s been a small increase in people who are willing and able to use the seven day switching service, yet over 70% of accounts are still held by the four largest high street players.

Banks should compete better for our business

Last year, the Competition and Markets Authority (CMA) agreed that the market wasn’t working well enough for consumers, and opened a major investigation. Today, we’re calling on the CMA to make sure it goes beyond fixing the basics and comes up with new solutions that will force banks to sit up and take action.

As our research has always indicated, solutions that make the costs of accounts clearer and more comparable should be a no-brainer. But these changes alone won’t be enough to transform things. That’s because so many people are unable or unwilling to switch regardless, meaning the banks have little incentive to change their ways.

Big banking changes we’d like from the CMA

We want to see reforms that will deliver genuinely better banking services for everyone. But what does this actually mean?

Well, what if the CMA considered increasing compensation levels for people who experience terrible customer service, or naming and shaming the worst providers? Or how about banks being required to proactively help customers who regularly slip into their unauthorised overdraft, rather than just hit them with high charges?

It’s clear that the CMA has a big job on its hands, but this is the perfect opportunity to propose remedies that would finally shake up this sector and make banks respond better to the needs of their customers.

What do you think the CMA should recommend to get banks to raise their game? How could things improve to make your everyday banking experiences better?


I’m perfectly happy with my bank – whether through counter service, cashpoint or online banking. So I think this intro is a bit too sweeping.
As far as helping people “who regularly slip into unauthorised overdrafts” goes I have a view on this, as you might expect. Once or twice might be accidental, but “regularly” is deliberate. If you are credit worthy then set up an overdraft facility with your bank. If they refuse they’ll have good reason – maybe because they deem you a bad risk. Taking money that is not authorised is dishonest – it is not yours. I’d much rather Which? campaigned for people to treat their financial dealings responsibly than to encourage this underhand behaviour. But don’t berate the banks.


I’m not unhappy with my bank – Santander, but they sometimes do crazy things. I had a letter from them in September about my 1-2-3 account. So far I make more money per month than they charge (£2) for having the account. But from January 11th 2016 they are going to increase that charge by 150%, blaming the rise on “changes in the banking industry”. So I will lose £3 more per month on the interest I earn on that account (£36 a year). But will I see my pension rise by 150% as a Christmas present this year? – I don’t think so! How can they justify raising costs by more than the cost of living? Banks? – they don’t deserve our custom!


The state pension has been increased by amounts well above the rate of inflation for two years or more now, and a lot of other goods and services have come down in price or been frozen [e.g. the TV licence]. Santander’s monthly charges for the 1:2:3 account are so low that even a £3 monthly charge would have seemed like an outrageous [50%] increase. Obviously with a complex multi-layered account like this there will be changes over time to keep it in balance between the bank and the customer. Such changes mean that it might not remain the right choice for everyone, but it only requires a monthly feed of £500 and two direct debits, and pays 3% on balances up to £20,000 when there is at least £3,000 in the account. And there are various other beneficial aspects to the account as well, subject to circumstances. This is probably one of the best new accounts to have come out of the banking industry for ages and gives the lie to the CMA.


I thought Richard LLoyd was rather condescending on the news saying Which? had tested people and only 1 in 10 knew which was the best account for them if they needed an unauthorised overdraft, and only 4 in 10 knew the best account for paying the best interest on a credit balance.

Oh dear, I am one of the 90% who don’t know where to get an unauthorised overdraft. Could that possibly be because I and probably quite a few others have no need of one?

Sounds a bit like a loaded questionnaire to give Which? the answers they wanted.


Alfa, I don’t understand Which?’s seeming obsession that unauthorised overdrafts should be a test for an acceptable bank account. I think encouraging people to use money they are not entitled to is wrong. There are other ways Which? should be promoting to get people using their bank accounts properly.


Malcolm – I’m very glad that overdraft facilities are provided. My bank once made a mistake and my account was debited twice for a mortgage payment for two months. Thanks to the overdraft, my other direct debits were paid and all I had to do was get the bank to correct the error and refund their overdraft charges.

Thankfully this was the only time that I have been overdrawn in my life, but others have accidents, illnesses and family crises that make money unimportant at the time. Overdraft facilities, preferably authorised, could be rather important.


I think most, if not all, current accounts allow you to overshoot up to a pre-authorised limit and at reasonable interest rates. It’s unauthorised overdrafts that banks need to control, and that can seem punitive [but justified in my opinion].


I think a little compassion is called for, John. If someone’s life is in crisis then I don’t think they deserve punitive interest charges if they have always managed their account well.

It’s better to have pre-arranged overdrafts but I think the banks should be discouraging customers from using them on a regular basis. Perhaps it would be better to interview those customers who don’t manage their money well.


The problem with that approach, commendable as it is, is that it’s normally those without a history of managing their accounts well who frequently overdraw. The young are particularly at risk in that respect


Ian – I strongly support moves to discourage people from living in debt. But in an emergency there are more important things than money to worry about, and I hate to see people being exploited by banks and other lenders.


I got a letter from First Direct saying if I was having problems paying my credit card bill to contact them.

I hadn’t realised I had not received my monthly bill so it had not been paid. When I told them this they reimbursed the interest.

You can’t get much better than that.

Compassion is there but it can only go so far. The banks can’t be expected to keep on propping up those who can’t handle their finances.


wavechange, we have small overdraft facilities on our current accounts just in case we need them Not used so far. But these have been agreed to by our bank and are easy to arrange – online or in branch. But this intro refers to “regular users of unauthorised overdrafts” – not for crises or odd forgetfulness but as a routine. Not a legitimate way to use your bank, and expensive in fees. They could, if responsible, seek help to put their financial affairs in order; maybe start by asking their bank who might, for example, help with rescheduling direct debits. Better than finding your card declined, a cheque returned or penalty fees on your statement.


I have an arranged overdraft facility too, Malcolm. I suspect they are standard these days. It would not have been enough to cover the mistake made by my bank.

Richard wrote: “… banks being required to proactively help customers who regularly slip into their unauthorised overdraft, rather than just hit them with high charges” I strongly support this.