Fair play? Don’t bank on it
The British public's relationship with its banks is at breaking point, research from money.co.uk has suggested. Following the Supreme Court ruling in favour of banks, and with Britain still reeling from the effects of the credit crunch, just 7% of Britons completely trust their banks to treat them fairly, whilst one quarter (25%) do not trust their banks at all.
In particular the British sense of ‘fair play' stands at odds with a broad feeling that banks do not do enough to help their customers avoid inadvertently running up unauthorised overdrafts, for instance by allowing ATM withdrawals and debit card purchases when funds are not available. Just 15% of adults believe that banks do enough to help customers avoid inadvertently running up unauthorised overdrafts
Worryingly for the consumer banking sector, the money.co.uk research also suggests a perception that these issues are common to all banks. For instance, only 15% of British adults feel that switching banks would make a real difference to the way penalty charges are applied to their accounts.
Chris Morling, managing director, money.co.uk said: "It seems that the events of the last year or so - from Northern Rock and the credit crunch, to the Supreme Court bank charges ruling - have deeply affected our relationship with banks.
"The erosion of trust should be a real concern, and the perceived lack of an alternative even more so. Based on these findings, I believe the banks have much work to do if they are to win back our trust - particularly when it comes to individual treatment and ‘fair play'. In the case of Northern Rock, we have already seen what can happen when a bank's customers completely lose faith in it."
A new deal?
The money.co.uk survey suggests that banks must look closely at the way customers are treated if trust is to be won back. To this end, money.co.uk asked a selection of users to suggest the steps they should take to treat customers more fairly, focusing on the issue of unauthorised overdrafts and penalty charges. Their suggestions break down as follows:
Banks should:
Ensure that customers are prevented from making ATM withdrawals from accounts with insufficient funds to cover the transaction
Ensure that customers are prevented from making debit card payments from accounts with insufficient funds to cover the transaction
Ensure that customers are prevented from making internet banking money transfers and payments from accounts with insufficient funds to cover the transaction
Ensure that internet banking systems offer total transparency around the issue of cleared and uncleared funds - to prevent customers from attempting to withdraw or transfer uncleared funds
Enable customers to mandate the automatic transfer of funds from linked accounts in order to avoid running up unauthorised overdrafts
Commit to never charging excess overdraft fees for unauthorised overdrafts of less than £10
Provide free or low cost SMS/email alerts to customers - warning them when account funds fall to a certain, pre-determined level
Consider introduction of a 'three strikes' system when dealing with unauthorised overdrafts of less than £100 but more than £10
Provide customers on one or two strikes with specific guidance on avoiding charges in future - e.g. advice on re-organising direct debits to fall immediately after day pay rather than later in the month when they are more likely to lead to unauthorised overdrafts
Write to every customer restating their policies around penalty charges.
Morling commented: "For many, the issue is not with charges per se, but with the banks' seemingly laissez-faire attitude to allowing customers to run up overdrafts in the first place - especially when you consider just how much of their revenue is derived from related charges.
"It seems to me, however, that the application of some smart technology and a little common sense would go a long way to addressing these issues. The reality is that, in a world where money can be spent in a huge variety of ways, banking systems and policies have failed to keep pace - and customers are getting a raw deal as a result."