Browsing "Commentary / Editorial"

Can the Post Office challenge the big banks?

Feb 1, 2015   //   by Keith McDonald   //   Banking and Savings Accounts, Commentary / Editorial  //  Comments Off on Can the Post Office challenge the big banks?

Post Office

The Post Office is pinning its hopes on new branding to remind customers that it’s a fully-fledged provider of financial products and services. It’s aiming to be the next main challenger to major banks by 2020 – but can it be successful?

The iconic institution has launched the new ‘Post Office Money’ brand this week in Islington, which will become the new platform for its financial products.

The rollout will be made to 300 branches. It follows the expansion of the Post Office’s new current accounts across the country, following an initial trial in the East of England.

The Monopoly is Waning

The new branding will associate the Post Office with financial products in the same way as other multifaceted brands such as Virgin.

And the Post Office’s vast branch network, which outnumbers all British banks collectively, should put the 350 year-old institution in a strong position. Major banks continue to close branches in local communities as increasing numbers head online to apply for and manage their financial products.

But the demand for local branches has not evaporated entirely. A recent white paper drafted by the statisticians at TNS Global notes that customers who choose to switch banks are identifying convenience as one of the major factors in their choice of new destination.

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Price-comparison sites branded misleading. Who knew!?

Oct 21, 2014   //   by Keith McDonald   //   Commentary / Editorial  //  2 Comments

So, our big-name competitors in the price-comparison marketplace got a right royal spanking yesterday. Quite right, too. Few can say they didn’t see it coming, and I don’t know quite how they dare look as shocked as they do.

Price Comparsion ProfitsThe price-comparison space is just like any other industry. It starts out with the best of intentions. Then the power and the money come into play and it all starts getting opaque and more than a little misleading.

We’re businesses, that much is clear. Some of us are out there for survival – the big fish are not. They’re raking in hundreds of millions in profit every year.

That tells you two things: firstly, that there’s plenty of money to be made from directing customers towards deals; and secondly, that deals could be better still if lenders weren’t chucking such a vast quantity of money at comparison sites trying to secure extra business.

The Financial Conduct Authority has already launched a probe into price comparison websites to identify whether they are misleading customers by promoting deals that generate more revenue rather than offering better value.

And if you look at the ownership of some leading comparison sites, that doesn’t do the industry any favours either. Confused.com is owned by insurance group Admiral, while GoCompare is part-owned by Esure.

Potential conflicts of interest emerge everywhere. As a consumer, how can you guarantee that you are being shown the best deal? It’s muddy water, for sure.

The latest fiasco regards energy tariffs, a hot topic in the personal finance world. The industry has come under a lot of pressure to make its pricing and tariffs simpler and to remove the barriers to switching.

While you can now switch bank accounts in just a week, it can still take longer than a month to switch energy suppliers.

Energy costs remain a major concern to households as incomes have stagnated, but too many customers remain baffled by pricing or unaware of better deals.

You’d think price-comparison sites would be the ideal solution, right?

“Wrong”, says the Big Deal, which (if you’ll forgive the pun) has well and truly shopped its rivals.

The Big Deal, which uses the bulk-buying power of subscribers to negotiate cheaper deals from energy suppliers, says that some leading price-comparison websites manipulate their navigation so that customers end up seeing the deals that pay the most commission.

With some energy suppliers paying up to £60 a time to land customers, you don’t wonder that sites are incentivised to push these deals in whichever way they can.

Of course, the sites in question have come out defending their corner. Owning up to dodgy morals would be a PR disaster, wouldn’t it? But even this reveals further complications.

MoneySuperMarket reminds us that some providers choose not to list products on comparison websites. But that’s not to say why they can’t be mentioned.

First Direct is one high-street brand that avoids comparison sites, and it’s very easily forgotten, despite offering one of the best current accounts and the country’s best customer service.

This reminder also ignores the thorny issue of exclusivity agreements, which limit products to high profile websites and monopolise the entire marketing budget.

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First Direct, and not judging a book by its cover

Sep 17, 2014   //   by Keith McDonald   //   Banking and Savings Accounts, Commentary / Editorial  //  1 Comment

Some well-known sayings are there for a reason. “Don’t judge a book by its cover” is among the best of them, and one of the traps we can easily fall into when it comes to judging our banks.

First Direct has just topped a customer service league compiled by Which?. It’s good news for the beleaguered banking industry, and it’s no fluke either. For some time now, the online bank has been lauded for its strong performance and excellent customer service.

But because it’s owned by HSBC, which has gone the other way in recent years, First Direct becomes too easily associated with all the misdemeanours of its parent bank.

Move Your Money, a campaign site that encourages people to switch banks, is one site that is particularly culpable of this blinkered way of thinking. Despite admitting that First Direct ‘has happy customers’, it overlooks this completely, preferring to bracket everything about the bank together with its owner.

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Get a Grip of this Mess! RBS receives another fine, as the shambles continues

Aug 28, 2014   //   by Keith McDonald   //   Commentary / Editorial, Latest Updates  //  Comments Off on Get a Grip of this Mess! RBS receives another fine, as the shambles continues

RBS Branch Interior

Beggering hell. The Royal Bank of Scotland received its SIXTH fine in just four years this week after an investigation by the city regulator uncovered some shocking mortgage advice statistics.

The Financial Conduct Authority fined the bank £14.5 million after it discovered that just 2 out of a sample of 164 mortgage cases between 2011 and 2013 were handled suitably.

Despite being found culpable of inadequate advice a whopping 99% of the time, the bank even managed to negotiate a third off the original fine for owning up and paying early.

At £14.5 million, it feels a bit like a slap in the face compared to the £3 billion the bank put aside for PPI mis-selling during the first three months.

Despite being 80% owned by the taxpayer, the bank continued to run slipshod over its customers, with insufficient procedures in place to monitor the faults.

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Save up to £100 on your train tickets by booking in advance

Aug 14, 2014   //   by Keith McDonald   //   Commentary / Editorial, Money Saving Tips  //  4 Comments

Most train commuters know that you can save a few quid by booking your tickets in advance. But the extent of these savings might well go unnoticed.

The current ticketing system – an oddity if ever there was one – allows you to book train tickets a full three months in advance.

It would be a stretch to imagine that most of us are organised enough for this. Normally, we adapt our travel requirements to suit everything else rather than adapting everything else to suit our travel arrangements.

But we may think again once the savings are flashed before our eyes.

New research from Vouchercloud shows that it’s possible to save up to 85% of the cost of a single ticket by booking a full 10 weeks in advance from the walk-on fare you would pay on the day.

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Don’t wait 18 months. Switch bank accounts today!

Jul 24, 2014   //   by Keith McDonald   //   Banking and Savings Accounts, Commentary / Editorial  //  Comments Off on Don’t wait 18 months. Switch bank accounts today!

Tesco Bank Current Account

The Competition and Markets Authority (CMA) has decided that the banking industry isn’t competitive enough and should be investigated. Big whoop…

What does this mean? Well, in around 18 months, we’ll be fed a bundle of spiel and headlines which tell us more-or-less what we already know.

Banks frequently use complex terminology to penalise customers, the CMA’s preliminary report said, owing to an uncompetitive market that offers little motivation for banks to change.

The savings market is also particularly weak at the moment. We might have hoped that the introduction of new ISA regulations this month would have prompted a positive response from banks. Instead, we saw the opposite. Banks withdrew accounts and cut rates.

So, even though a majority of people can probably bypass savings tax altogether, the impact of the incentives remains frustratingly muted. The recent rise in inflation reminds us that we cannot rely on low price rises to excuse poor returns on our savings.

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