Proof of ID and address (Tesco Bank)

GingerBob_3

Sounds to me like Tesco is a company to avoid. I do sometimes wonder why people go to a grocer to obtain financial services. You wouldn't go to a bank to a buy a cabbage, so why go to Tesco for a bank account?

(got to admit, I do have one of their credit cards ).

Again, it's money laundering paranoia that's driving all this stupidity.

masonic

GingerBob wrote: »

Sounds to me like Tesco is a company to avoid. I do sometimes wonder why people go to a grocer to obtain financial services. You wouldn't go to a bank to a buy a cabbage, so why go to Tesco for a bank account?

The only reason I went there is to be able to have a savings account capable of setting up direct debits to my other accounts which require them.

DragonQ

masonic wrote: »

The only reason I went there is to be able to have a savings account capable of setting up direct debits to my other accounts which require them.

Yeah that's the only reason I'm opening this savings account. Their credit card was great for the 0% interest (which runs out next week) and their current accounts are decent since they pay better interest than their savings accounts. :undecided

bowlhead99

GingerBob wrote: »

Again, it's money laundering paranoia that's driving all this stupidity.

To be honest, I sympathise with the OP *but* I find it quite amusing that people expect banks to bend over backwards to accept us as new customers and bemoan the terrible customer service and lack of loyalty from the banks towards their customer base. This post is a bit OT from AML rules and so on, and a lazy sunday afternoon with a couple of beers is never going to get you a short post from me, but bear with me.

In the old days, you had a current account where you received your salary, wrote your cheques to pay your bills, then later had a debit card and a variety of direct debits etc to help you settle your day to day expenses as efficiently as possible. In reality, nobody needs more than one such account.

You would then want one or more other accounts where you could put a growing pot or pots of money that you didn't need to access very often as 'savings accounts'; shopping around between suppliers (banks and building societies) as necessary to get a competitive rate for instant access or limited withdrawals from time to time.

But the main day to day account does not need to hold a lot of cash and historically never had a great interest rate, which people accepted because hey, they could just leave cash in this account and access it while at any one of tens of thousands of ATMs around the country, pay £1.20 for a coffee here and £1000 for a sofa there and have all their debts settled electronically between the bank and the merchant, without any monthly fees for writing cheques, using debit cards, withdrawing cash, receiving statements, like you would probably have if you were running a bank account elsewhere in the developed world.

In recent years the banks realised that in a competitive market it should be quite lucrative to be the provider of that 'main current account' of a person or a family, because if you were at the core of their banking experience you would have more opportunity to sell them savings products and credit cards and loans and insurances on the back of doing a decent job of handling their money, and people have a preference to keep stuff 'all under one roof' so it's key to get in there and be the person providing the main account where the salaries go in and the bills go out.

So they gave away bundled account perks (sometimes for a fee) and in more recent years, promotional interest rates on some core amount of cash held in the account (e.g. first few thousand ££).

However, crusading consumer groups were quick to point out that the best way to get a good deal from the banks was to play them off against each other so that none of them could make any real money off you. The banks realised that they would have to be careful that if the spirit of the agreement was that they offer you a sweet deal to migrate your 'main account' to them, then in practice they would want to stop you having their account as only one of ten that you used from time to time while creaming off all the benefits - and doing all your real banking, in practice, with a rival.

So, they have terms and conditions, so that Halifax will give you a fiver a month for free if you pay in at least £x a month regularly and are operating a couple of direct debits - it looks a bit more like they've got your 'main account'. Nationwide will pay you interest on the first £x in your current account, or offer you insurances and other features, as long as you are running at least £x into the account every month and are happy to operate the account online rather than taking up their personnel time with passbooks in their bricks and mortar locations like in the old days. And so on. From their perspective the banks really do want to have you using their service as your 'main' account so they can be the centre of your financial world, and they're willing to pay for that.

But many consumers, wanting to get the absolute best possible return for themselves are too smart to let banks make money off them. If TSB needs me to fund the account with £x per month, why don't I just open two current accounts with that one bank and have them fire standing orders at each other. Haha, it's not my salary coming in at all, I beat the system and the bank now pays me a high promotional rate of interest even though I'm not using them as my main account at all and they have no real opportunities to take any profit from me.

If Halifax want to know that it's really my main account before they let me have their fiver 'thank you, loyal customer' cashback, I'll fool them into accepting me as a customer by having a £1 direct debit to a savings account with another bank, instead of a real direct debit to pay my bills. Haha, I beat the system and got all their free cash even though my monthly deposit is whatever bare minimum they set, and I only ever have my money in their bank one night per month.

It would be unpopular on here to say that we shouldn't exploit the banks in this way: "well, if they didn't want me to be able to do a bare minimum deposit of £750 a month and withdraw it same day, they should have made it £2000 minimum and had some other terms, they shouldn't persecute me for meeting their official terms and conditions to the letter". And perhaps that is fair comment. But if you want to exploit the banks T&Cs to the letter then perhaps you have to accept that they will sometimes want to stick to their T&Cs when you open up yet another account just to exploit them a bit more.

To use the OPs situation with Tesco as an example:

• Tesco has a current account which costs a fiver a month but gives you clubcard points and allows you to earn 3% interest on the first £3k you have sitting in the account, and waives the fiver if you're depositing £750 a month (I guess this is an attempt to secure customers who are really using the account like it was their main account).

So, OP opens two current accounts with Tesco, not because he needs two accounts or wants to really use them as his main bank (in fact, he has other current accounts elsewhere), but he wants to make the maximum interest on the minimum cash deposit and not a penny more.

• Tesco offer a credit card with a nice 0% rate on balance transfers and purchases

The OP has one of these cards which "was great for the 0% interest". i.e. he will happily take money off Tesco for an entire year without paying them back and give them no interest on it, but if they want to charge interest it would no longer qualify as a great card and he'll find another provider that will give him something for nothing.

• Tesco offer one of the few savings accounts that you can set up as a direct debit and have them pull money out of your other accounts

The OP wants to set one of these up, not because the rate on savings is particularly high, and not because he wants to deposit a lot of money into it, but just so he can get Tesco to pull some nominal amount of money from a current account elsewhere from time to time. And make it appear to a rival bank that he's got some active direct debits and therefore he can meet their bare minimum T&Cs for the promotional 'main current account' service he just opened with them.

So (and no offence intended to the OP, who is just trying to beat the banks at their own game), the OP is trying to have Tesco create yet another zero-profit account relationship for him so that he can make them pull some cash from another bank elsewhere every month to extract his maximum profit from that other bank.

The amount of income that Tesco can make on this account he's trying to setting up is miniscule because they will never really hold his cash. But they have to create a whole infrastructure, online services, compliance, tax reporting, customer care etc just to help him 'beat the system' on yet another bank account set up with a rival which still isn't even his main current account.

If they spend five minutes of time opening one envelope to see if he included correct AML documentation, that's already too much - it's cost them 10 years expected revenues already. Let alone the fact that he couldn't supply the standard documentation they wanted and they are now going to have to spend time with him on the phone to try and resolve. For a customer profile that they absolutely do not want but can't easily turn away because it might damage their reputation. I'm sure they will do their best to help you out eventually because they are at heart a friendly bunch and don't want ill feeling towards the brand to spread like wildfire around the internet and your circle of friends.

However, despite them never having a chance to make a single penny off you while operating two separate current accounts and a credit card and multiple savings accounts, if you look up Tesco on MSE you will see threads about how their customer care sucks because of all the compliance "stupidity" and how banks are all bloodsucking vampires who should all take a pay cut or be regulated out of existence.

Nothing personal OP - I can see how it's hard for you to meet their requirements and they will probably let you off in the end - but it frustrates me sometimes how people trying to get something for nothing get annoyed by the occasional stumbling block or bit of red tape which stops them doing everything online in two seconds. Then once they raise their problems here online or in the tabloids, people think it's shocking that the banks are being so appalling.

The bank would absolutely love to decline the sort of business you are giving them, but in an effort to keep market share and maybe make a little bit of money off the credit card they gave you - or an accidental larger-than-intended deposit that pays lower interest - they will probably have to begrudgingly accept you.

DragonQ

Erm, the whole reason everyone has to go through all of this nonsense just to get decent interest rates is because the banks want us to. They could easily offer 3% savings accounts, but no, they only offer such rates on current accounts with all sorts of restrictions.

That's the banks' faults, not mine.

Archi_Bald

DragonQ wrote: »

Erm, the whole reason everyone has to go through all of this nonsense just to get decent interest rates is because the banks want us to. They could easily offer 3% savings accounts, but no, they only offer such rates on current accounts with all sorts of restrictions.

That's the banks' faults, not mine.

They have no incentive whatsoever to offer savings accounts with 3% as there is nil prospect that such accounts would be profitable for them as long as they can borrow at sub-1%. At least with current accounts, they do have a chance to make a profit from the account. Goes without saying that business that make no profit will fold.

bowlhead99

DragonQ wrote: »

That's the banks' faults, not mine.

Sure, if you say so, but 3% for zero risk when base rates are that level or more, is quite easy. If government base rates are 3% and the practical interbank offer rates (libor) are also up at that level and inflation is 4%, of course a bank can "easily offer 3% savings rates" and lend the money onwards.

We're not in that world these days. A bank can't give you 3% on unlimited cash, instant access, when he can only get 0.55% libor for a safe 3 month deposit or 0.47% overnight, while inflation runs under 2% and the government is offering "funding for lending" support to him and his closest rivals. They would lose their shirts giving you 3%.

With that state of affairs, it can only be a loss leader and therefore it's common sense that they'll only offer a limited amount of interest at that rate by restricting either the deposits they accept or by restricting the amounts they pay that promotional rate on. The state of the world's economy, which moves from time to time, is not the fault of Tesco. They have to work with what they've got.

Like I said, you can't blame customers for running round twenty banks and trying to grab all the promo money from all of them while never giving a penny of net profit to any of the banks. Capitalism and greed makes people want to grab as much of the pie as they can.

Customers like yourself will say they wouldn't try to take advantage so much if the banks would simply give them a rate of say, 3% : i.e. six times base rate and 50% better than inflation for a zero risk insured savings account. I can well believe that, because if all the banks would just drop free money into my lap as a matter of course, I wouldn't feel the need to spend my precious time going out and exploiting promo deals.

Well, I'm sure that's comforting to the banks.

But meanwhile it still brings a wry smile to my face when people have some kind of trouble opening up umpteen more accounts to exploit loopholes, complain that the service they don't pay for isn't perfect, and then suggest all the company needs to do is to give them something for nothing as standard and then they would stop trying to exploit every loophole to get something for nothing.

I know there are lots of people here who are savvy enough to seek out the best opportunities and share them here which is a great public service. Having taken advantage of some of the offers , though not to extremes, it's probably a bit harsh for me to enjoy the schadenfreude. Still, I do

DragonQ

I'm well aware of why they make people jump through hoops to get good rates, but that doesn't mean I'm somehow gaming the system by doing so. They don't have to offer good rates at all; they could stick with below-inflation savings accounts and be done with it. If they decide to create offers as loss-leaders and not everyone bites as they want, that's their problem. This is a money saving forum, do you expect people here to not take advantage of the shared information and loss-leader bargains?

Also, the base rate has been 0.5% since I started saving, and this is the first year that I haven't been able to find a savings account or ISA at 3% or above. Hell, the most recent non-ISA savings account I had was 3.2% instant access. The banks were plenty happy to offer such rates in the past few years and presumably make most of their money through investments anyway. Has anything drastically changed in the last year or have the banks just collectively come up with a better way to make money?

bowlhead99

DragonQ wrote: »

Also, the base rate has been 0.5% since I started saving, and this is the first year that I haven't been able to find a savings account or ISA at 3% or above. Hell, the most recent non-ISA savings account I had was 3.2% instant access. The banks were plenty happy to offer such rates in the past few years and presumably make most of their money through investments anyway. Has anything drastically changed in the last year

The base rate is only an indicator of the real market rate and it dropped to 0.5% in 2009, but in practice a bank can't always borrow at those rates depending on its own creditworthiness and what rates are really out there in the inter-bank market. The LIBOR rate can fluctuate up and down. Although it dropped heavily in 2009 temporarily, the 3-month LIBOR was running at over 1% in late 2011/ early 2012 and only crashing back down to 0.5% ish by October 2012. So that was one factor feeding your previous high rates.

Also, when you first started saving, the banks probably didn't have access to the government sponsored funding for lending scheme, where they get access to cheap finance (so would be mad to get it more expensively from retail customers) the more they lend out to certain types of borrowers.

A knock on effect of the low interest rates and cheaper credit being offered by everyone is the rate on mortgages and personal loans and business loans that represent income to the bank, have come down a lot. If you parked money with them at 3-4% a few years back, they might have lent it on to a borrower at 8%, run their business and take a small profit, and afford to maintain the 3-4% rate.

Now Tesco is routinely lending out an £8k-15k unsecured personal loan at 4.1% to stay competitive, and there is no wiggle room to give you, a saver, some monster guaranteed interest rate in the context of what they can do with the money in a relatively low risk way. And they have to lend in a relatively low risk way, as there are new regulations and restrictions on how they use funds and what capital they need to keep back to meet the EU and UK rules.

Also, in 2010, the annual CPI inflation announced each month was between 3 and 3.7%. In 2011, between 4 and 5.2%. 2012, 2.2%-3.6% ; 2013, 2-2.9%. But now inflation has settled lower, between 1.5 and 1.9 in recent months. Clearly if inflation is high, banks can take your money and give you back more of it, even though it's not so much more in real terms - most likely, less. But when inflation is lower, they can't keep giving you back 3% more than you gave them, because that is a 1-1.5% real return which is way more than they can find in the market at zero risk.

If you combine this with the fact that any savings product tends to get 'honoured' for a time after they price it up (e.g. get a 3% savings rate which includes a 2% bonus for the first year only), you could still have been on a 3% rate during 2013. But by now, the true state of the market has now filtered through, the banks have already had 5 years of credit crunch/recession to try to shed staff and become more efficient and make what savings they can, and they are out of options.

The cold reality is that you will inevitably be seeing 2% or quite a bit less assuming you don't want to fix - which many people don't, because the only way for interest rates is up, eventually. And assuming you haven't been able to access a special deal due to a previous banking/savings relationship that the man on the street can't qualify for.

So, the fact that the banks were previously able to offer higher rates doesn't really imply that they should still be offering them now to all and sundry. Because yes, things have happened in the market to significantly change the amount you can get from basic zero risk accounts.

They will offer you some token amount of financial reward for putting business through their account in a way that might imply you're going to use them for a substantial chunk of your financial life from month to month, but these promo rates are coming from marketing budgets, customer acquisition budgets, rather than being a standard rate of return they can actually afford to give you on all the money you might like to deposit somewhere.

So, if something gets in the way of you opening an account smoothly when you were only being a rate tart and had no intention of doing any real savings with them or adopting them as your main bank, they are not really missing out on a great profitable mutually beneficial relationship.

And if more people are tarting themselves around to multiple banks at the same time to deposit the bare minimum and grab the cash, the actual average revenue per new customer drops through the floor. That's hardly going to encourage them to work hard to take on even more low value customers, or increase the level of freebies or interest rates for new customers.

So basically the catch 22 is that MSE-ers are getting more and more desperate to exploit loopholes and get their hands on more free money from more banks, which can only cause the banks to tighten the loopholes to make it more difficult for MSE-ers to get a good deal out of a bank. Meanwhile people who discover that they got away with abusing the T&Cs to have 3+ current accounts and collected the promo interest on all 3 accounts, may be reluctant to post it here because if it becomes too well known the bank might act to stop that specific loophole or just can the deal altogether.

talexuser

Bowlhead, playing devil's advocate, makes it sound like our fault the poor banks don't make money from rate tarts. But the fact remains they have chosen to offer these accounts whether minimum pay ins or direct debits required, as a punt on future profitability. If they then succeed in selling poor value extras to customers, or get lots of overdraft charges it becomes a good call for them. If they don't make money because have more tarts than genuine current holders who they can flog expensive insurance and bad value isas to - well that's bad call for them.

Normally competition should mean than bad judgement firms eventually get replaced by good judgement ones. Since the banks seem to have a privileged position of a) being bailed out by the taxpayer after failing and b) scandal after scandal of impropriety if not actual fraud, their problem is the sympathy pot for them from the general public is at rock bottom and may remain there for some time to come yet.... irrespective of the arguments of any case.