I recently had the great privilege of meeting a group of personal finance bloggers at the Write on Finance event. I’d like to reflect more on this in due course, but it raises an important point that arose this past week.
We’re often led to question why what we do is important. Why is it worth writing guides, for example, when the internet is full of them? Why is it worth trying to reach out when it takes time and effort and when mainstream banks should be able to provide all the help that their customers need?
Well, when it’s revealed how little banks often know about basic facts – as Which? did recently – it makes our efforts feel so much more worthwhile.
Basics Gone Wrong
We have every reason to be suspicious of banking advice right now. Widespread mis-selling and warped commission systems have shown how far banks’ priorities have strayed away from customers. (Read more about ‘Salespoints’ at Lloyds.) But despite all this, we might expect most retail bank advisers to have a decent grasp of the basics. They are, after all, institutions that handle your money, sell you their products, and that have FSA approval to advise you about your money.
But ask them basic questions about ISAs, for example, and you might struggle to get accurate answers.
Which? quizzed 15 banks about transferring cash ISAs – a popular line of questioning at this time of year as the start of the new tax year approaches. The questions were as follows:
How do I transfer my cash ISA?
Are there any rules about how much I can transfer?
Can I transfer to a stocks and shares ISA?
Believe it or not, the results were rather shocking. HSBC, Europe’s largest bank, registered the worst performance, with only 33% of correct answers to these questions across a number of calls. Yorkshire Bank fared little better, at 35%, while the much-maligned RBS also made the bottom three, scoring 44%.
Mercifully, the government’s savings service, National Savings & Investments (NS&I) topped the table, but still only scoring 72%. Santander – often chastised for its customer service – registered a close second, at 71%.
Best and worst performers:
- National Savings & Investments – 72%
- Santander – 71%
- Co-operative Bank – 68%
- RBS – 44%
- Yorkshire Bank – 35%
- HSBC – 33%
Apparently, a representative from Yorkshire Bank did not know of any cash ISA allowance at all (it’s currently £5,640 per year). And in one case, a representative at RBS told a mystery shopper that transferring an ISA was achieved by withdrawing funds, shutting the account, and placing it in a new account elsewhere.
In theory, yes, this could be a last-ditch option if a saver is determined to move funds to an ISA that does not allow inbound transfers. But don’t be fooled. It’s a rare exception rather than the rule. It goes to show that the quality of advice available from banks falls far below what we might expect of them.
The worst thing, perhaps, is that this hasn’t really come as a surprise. These falling standards in information have been reflected in my own banking experience.
In the 15 years with my current bank, I’ve frequented a number of local branches as I’ve moved around the country. Levels of courtesy and service have always been second to none. But I’ve been non-plussed recently by the knowledge on show from my latest local branch of 18 months about their main products.
So, when I wrote a review of the new FlexPlus packaged current account earlier this month, I wasn’t about to hide from the odd correction that came in. As I’d asked the bank on the issue of charges, there’s only so much responsibility I’m willing to take. And I wasn’t the only one to publish the same error.
We’d understand if a rep felt awkward being quizzed about investment products. Alarm bells would probably be ringing if all customer reps considered themselves qualified. But not knowing about current accounts is another matter entirely.
Of course, it signals the issue of circulating information. When you’re listing a large numbers of consumer products, you’re often at the mercy of the line of information. And the vast number of savings accounts and ISAs, with different rates and conditions, is just baffling.
Excluding children’s and business savings, Nationwide lists more than two-dozen savings accounts, and rates have been all over the place in the last few months. Staying on top of all of this must be a complete nightmare.
Following the recent Sergeant report on the complexity of accounts, there’s been talk of accrediting products with a Kitemark to indicate ‘simplicity’ – flat rates instead of bonus rates, simple terms instead of jargon, and so forth. Whenever banks start to take notice, it will surely be just as useful in helping their own staff to get the basics right.