The British public's relationship with its banks is at breaking point, according to research from
money.co.uk. Following the Supreme Court ruling in favour of banks, and with Britain still reeling from the effects of the credit crunch, just seven per cent of Britons completely trust their banks to treat them fairly, whilst one quarter (25 per cent) 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 per cent 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 per cent of British adults feel that switching banks would make a real difference to the way penalty charges are applied to their accounts.
“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,” said Chris Morling, managing director, money.co.uk
"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."
In light of the survey’s finding, money.co.uk 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.
"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,” added money.co.uk’s Chris Morling.
"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."
The survey highlighted a range of examples of the banks' failure to help customers avoid inadvertently running up unauthorised overdrafts. They included:
* A customer charged £48 for a 25p overdraft
* A customer repeatedly charged as a result of poorly timed direct debits, but refused an overdraft facility
* A customer whose ATM and debit card activity has led to unauthorised overdraft charges
* A customer given a £300 overdraft facility, without their knowledge, having already taken out a substantial loan in order to pay off a large overdraft
* A customer who is regularly pushed into overdraft by her bank's monthly fees
How to avoid unauthorised overdraft fees - hints and tips
* Find out what your bank's policy is with regard to your account overdraft entitlement and fees for unauthorised overdrafts
* Ensure any direct debits and standing orders on your account are set up to go out of your account soon after your monthly income is deposited
* Check your balance before withdrawing money from an ATM
* Check your balance before embarking on shopping trips - make sure you know how much you have available, and make sure you leave enough to cover any regular payments
* Find out if your bank offers internet banking/phone banking to enable you to check and manage your account regularly
* Find out if your bank offers a text ‘alert' service informing you of your balance or if your account has gone overdrawn
* If you do discover your account has gone overdrawn - see if you can arrange to transfer funds the same day as this will usually prevent charges being applied
