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Revealed: Britain’s worst banks
mzqa395
Posts: 376 Forumite
http://business.timesonline.co.uk/tol/business/money/consumer_affairs/article2240363.ece
NATWEST has been named as the worst high-street bank in a comprehensive survey that ranked all the big names across their product range to reveal exactly how they are ripping off customers.
The big five – HSBC, NatWest, owned by Royal Bank of Scotland, Barclays, Halifax Bank of Scotland, and Lloyds TSB – are on target to make record profits of nearly £40 billion this year, thanks to their paltry current account rates, derisory savings interest and punitive charges.
Nevertheless, more than half of us still have at least our current account with a high-street bank, and more than two-thirds buy investments from a bank or building society.
The Sunday Times asked a panel of industry experts to rank the big high-street banks on their current accounts, credit cards, savings, mortgages and investments.
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In one of the most exhaustive surveys conducted, they were marked out of 10 in each of the five areas. For savings, for example, they were ranked across their entire range on rates as well as consistency and transparency. For mortgages, our experts looked at service and fees as well as rates.
The results were then condensed to give an overall average score, so customers can compare their bank with the rest of the high street and decide whether to switch.
Our experts evaluated the big five as well as Abbey and Alliance & Leicester (A&L), which took top spot in our survey.
NATWEST
Score: 4.9 out of 10
The Good One of the few products that stands out as a good deal is NatWest’s Classic Credit card. New customers benefit from a 13-month interest free period on balance transfers and the bank’s transfer fee is one of the lowest at 2% – Barclays, Halifax and Lloyds TSB charge 3%.
The card also charges a competitive standard rate of interest at 13.9% – the average rate charged by the other big banks is 15.9%.
The Bad Sue Hannums at AWD Chase De Vere, an independent adviser, said none of its savings accounts pay competitive rates of interest.
The Reward Saver, for example, pays between 3.75% and 4.1%, depending on the balance, but the rates include a one percentage point bonus if you make just one withdrawal a year. If you make more, the bonus reduces.
NatWest’s mortgages were also ranked bottom by James Cotton at L&C Mortgages. He said: “It has one of the highest standard variable rates at 7.94% and it levies a higher lending charge on loans above 90%. It can be good in specialist areas, but its standard mortgage deals can usually be beaten.”
NatWest said: “We are very surprised by the results and believe that they are misleading. Regular independent research shows customers recognise that NatWest offers great value and excellent service.
“For example, we believe we offer the best value of the banks on Isas, credit cards, and offer £1,000 if we can’t beat competitors’ mortgage deals.”
LLOYDS TSB
Score: 5.1 out of 10
The Good Cheltenham & Gloucester (C&G), Lloyds TSB’s mortgage division, has recently abolished its £225 exit fee for new customers, and it also has a very competitive lifetime tracker at 0.17 points above Bank rate, giving a current rate of 5.92%. There is no arrangement fee and free valuation and legal work. It is available on loans up to 60% of the property’s value. The Bad Lloyds TSB’s penalty fees on current accounts are high. It charges £35 if a direct debit is refused.
The bank has also removed a £10 buffer that it used to give customers in case they slipped into the red by mistake, so anyone who does not have an overdraft facility set up could face penalty fees even if they go overdrawn by just a few pence.
Lloyds has also put up the interest rate when you go overdrawn with authorisation from 18.2% to 19.3%. The unauthorised rate is 29.8%.
BARCLAYS
Score: 5.2 out of 10
The Good Woolwich, Barclays’ mortgage arm, has a lifetime tracker that is virtually identical to the C&G deal.
The Bad If you have a current account with Barclays, move. It controls about 20% of the current-account market, according to Credit Suisse, yet its standard account pays just 0.1% on balances in credit. The authorised overdraft rate is 15.6%, but you will pay 27.5% if you exceed your limit, or go into the red without authorisation.
HALIFAX
Score: 5.4 out of 10
The Good The Halifax One Credit card offers the longest interest-free period for both balance transfers and purchases.
Robert Kenley at Moneysupermarket said: “This card really stands out because cardholders get a 12-month 0% deal for both purchases and transfers. Customers are often caught out when the 0% deal on each element is of different lengths.”
For example, Virgin’s credit card offers a 15-month interest-free period on balance transfers but purchases are only exempt from interest for three months.
The Bad Halifax has one of the worst savings accounts. Liquid Gold, a market leader in the 1980s, pulled in billions of pounds but now pays just 1.36%. Its Guaranteed Saver pays a more competitive 5.75% on £5,000 or more, but Sainsbury’s Bank’s Internet Saver pays 6.25%.
ABBEY
Score: 5.8 out of 10
The Good Abbey has one of the best cash Isas on the market. Savers earn 6% up to £9,000 and 6.25% on anything above. This is particularly good because most of the leading deals only accept the current year’s £3,000 allowance; they do not accept transfers of previous year’s Isas. But bear in mind that Abbey’s Isa includes a 0.5 percentage point bonus until May 2008.
The Bad Justin Modray at Bestinvest, an adviser, ranks Abbey’s UK Growth fund as one of the worst. The £1.3 billion fund has failed to beat the FTSE All-Share index in all but two of the past 10 years. It has returned 68.4% in the last five years, against 93.5% for its sector. Abbey has announced it is bringing its funds back in-house, but Modray does not expect things to get much better.
HSBC
Score: 5.9 out of 10
The Good Bestinvest gave HSBC 7.5 out of 10 for its investment range, the highest of the big banks.
Unlike the other main players, it offers investment funds from a range of providers.
Investors would still get a greater choice from an independent adviser, but included in its range are Invesco Perpetual Income, Schroder Global Property Securities and Schroder European Alpha Plus, all of which are funds Bestinvest recommends to clients.
The Bad You should be wary of HSBC’s Online Saver. It advertises a rate of 6.25%, but customers do not receive interest in any month they make a withdrawal.
HSBC is also offering fee-free mortgages until the end of September, but none of HSBC’s rates are particularly competitive.
A&L
Score: 6.5 out of 10
The Good Alliance & Leicester’s Premier Direct current account is the best of all the big names. Moneysupermarket, a comparison site, gives it 10 out of 10 for both its in-credit interest and its overdraft rate. Customers receive 6.5% on balances up to £2,500 until October 30 next year, after which it reverts to one point below Bank rate. This gives a current rate of 4.75% – better than the 0.1% paid by Barclays, NatWest, HSBC and Lloyds TSB.
The overdraft facility is is interest-free for the first year, and 5.9% thereafter – against NatWest’s rate of 19.99%.
The Bad A&L has been one of the worst offenders when it comes to letting savers down. There have been five quarter-point rate rises since last August, yet the bank has not passed on the full increases to all of its savers. Those with its Phone Saver account, for example, have seen their savings rate increase by only 0.7 points.
Watch out for A&L’s Direct Saver. It seems good because you can earn 6.3% above £1,000. Buy you earn no interest in any month you make a withdrawal.
THE LEAGUE TABLE
The top performers
Alliance & Leicester Scores with a market-leading current account paying 6.5% in the first year on up to £2,500, and mortgages that often feature in the best-buy tables.
HSBC The best investment range on the high street, although you should still watch out for catches in its savings accounts.
Mid-table mediocrity
Abbey One of the best cash Isas on the market, but its performance is let down by its investment range, particularly its sluggish £1.3 billion UK Growth fund.
Halifax Its credit card is among the best on the market, but its Liquid Gold savings account, paying just 1.36%, is among the worst.
Barclays A poor current account and savings range is pulled up only by a decent performance from Woolwich, its mortgage arm.
The relegation zone
Natwest Gets the red card because our panel said none of its savings accounts paid decent rates, and its mortgages are almost always beaten.
Lloyds TSB Let down by its poor current accounts, with high overdraft rates and particularly punitive fees if you accidentally fall into the red or exceed your overdraft limit.
NATWEST has been named as the worst high-street bank in a comprehensive survey that ranked all the big names across their product range to reveal exactly how they are ripping off customers.
The big five – HSBC, NatWest, owned by Royal Bank of Scotland, Barclays, Halifax Bank of Scotland, and Lloyds TSB – are on target to make record profits of nearly £40 billion this year, thanks to their paltry current account rates, derisory savings interest and punitive charges.
Nevertheless, more than half of us still have at least our current account with a high-street bank, and more than two-thirds buy investments from a bank or building society.
The Sunday Times asked a panel of industry experts to rank the big high-street banks on their current accounts, credit cards, savings, mortgages and investments.
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In one of the most exhaustive surveys conducted, they were marked out of 10 in each of the five areas. For savings, for example, they were ranked across their entire range on rates as well as consistency and transparency. For mortgages, our experts looked at service and fees as well as rates.
The results were then condensed to give an overall average score, so customers can compare their bank with the rest of the high street and decide whether to switch.
Our experts evaluated the big five as well as Abbey and Alliance & Leicester (A&L), which took top spot in our survey.
NATWEST
Score: 4.9 out of 10
The Good One of the few products that stands out as a good deal is NatWest’s Classic Credit card. New customers benefit from a 13-month interest free period on balance transfers and the bank’s transfer fee is one of the lowest at 2% – Barclays, Halifax and Lloyds TSB charge 3%.
The card also charges a competitive standard rate of interest at 13.9% – the average rate charged by the other big banks is 15.9%.
The Bad Sue Hannums at AWD Chase De Vere, an independent adviser, said none of its savings accounts pay competitive rates of interest.
The Reward Saver, for example, pays between 3.75% and 4.1%, depending on the balance, but the rates include a one percentage point bonus if you make just one withdrawal a year. If you make more, the bonus reduces.
NatWest’s mortgages were also ranked bottom by James Cotton at L&C Mortgages. He said: “It has one of the highest standard variable rates at 7.94% and it levies a higher lending charge on loans above 90%. It can be good in specialist areas, but its standard mortgage deals can usually be beaten.”
NatWest said: “We are very surprised by the results and believe that they are misleading. Regular independent research shows customers recognise that NatWest offers great value and excellent service.
“For example, we believe we offer the best value of the banks on Isas, credit cards, and offer £1,000 if we can’t beat competitors’ mortgage deals.”
LLOYDS TSB
Score: 5.1 out of 10
The Good Cheltenham & Gloucester (C&G), Lloyds TSB’s mortgage division, has recently abolished its £225 exit fee for new customers, and it also has a very competitive lifetime tracker at 0.17 points above Bank rate, giving a current rate of 5.92%. There is no arrangement fee and free valuation and legal work. It is available on loans up to 60% of the property’s value. The Bad Lloyds TSB’s penalty fees on current accounts are high. It charges £35 if a direct debit is refused.
The bank has also removed a £10 buffer that it used to give customers in case they slipped into the red by mistake, so anyone who does not have an overdraft facility set up could face penalty fees even if they go overdrawn by just a few pence.
Lloyds has also put up the interest rate when you go overdrawn with authorisation from 18.2% to 19.3%. The unauthorised rate is 29.8%.
BARCLAYS
Score: 5.2 out of 10
The Good Woolwich, Barclays’ mortgage arm, has a lifetime tracker that is virtually identical to the C&G deal.
The Bad If you have a current account with Barclays, move. It controls about 20% of the current-account market, according to Credit Suisse, yet its standard account pays just 0.1% on balances in credit. The authorised overdraft rate is 15.6%, but you will pay 27.5% if you exceed your limit, or go into the red without authorisation.
HALIFAX
Score: 5.4 out of 10
The Good The Halifax One Credit card offers the longest interest-free period for both balance transfers and purchases.
Robert Kenley at Moneysupermarket said: “This card really stands out because cardholders get a 12-month 0% deal for both purchases and transfers. Customers are often caught out when the 0% deal on each element is of different lengths.”
For example, Virgin’s credit card offers a 15-month interest-free period on balance transfers but purchases are only exempt from interest for three months.
The Bad Halifax has one of the worst savings accounts. Liquid Gold, a market leader in the 1980s, pulled in billions of pounds but now pays just 1.36%. Its Guaranteed Saver pays a more competitive 5.75% on £5,000 or more, but Sainsbury’s Bank’s Internet Saver pays 6.25%.
ABBEY
Score: 5.8 out of 10
The Good Abbey has one of the best cash Isas on the market. Savers earn 6% up to £9,000 and 6.25% on anything above. This is particularly good because most of the leading deals only accept the current year’s £3,000 allowance; they do not accept transfers of previous year’s Isas. But bear in mind that Abbey’s Isa includes a 0.5 percentage point bonus until May 2008.
The Bad Justin Modray at Bestinvest, an adviser, ranks Abbey’s UK Growth fund as one of the worst. The £1.3 billion fund has failed to beat the FTSE All-Share index in all but two of the past 10 years. It has returned 68.4% in the last five years, against 93.5% for its sector. Abbey has announced it is bringing its funds back in-house, but Modray does not expect things to get much better.
HSBC
Score: 5.9 out of 10
The Good Bestinvest gave HSBC 7.5 out of 10 for its investment range, the highest of the big banks.
Unlike the other main players, it offers investment funds from a range of providers.
Investors would still get a greater choice from an independent adviser, but included in its range are Invesco Perpetual Income, Schroder Global Property Securities and Schroder European Alpha Plus, all of which are funds Bestinvest recommends to clients.
The Bad You should be wary of HSBC’s Online Saver. It advertises a rate of 6.25%, but customers do not receive interest in any month they make a withdrawal.
HSBC is also offering fee-free mortgages until the end of September, but none of HSBC’s rates are particularly competitive.
A&L
Score: 6.5 out of 10
The Good Alliance & Leicester’s Premier Direct current account is the best of all the big names. Moneysupermarket, a comparison site, gives it 10 out of 10 for both its in-credit interest and its overdraft rate. Customers receive 6.5% on balances up to £2,500 until October 30 next year, after which it reverts to one point below Bank rate. This gives a current rate of 4.75% – better than the 0.1% paid by Barclays, NatWest, HSBC and Lloyds TSB.
The overdraft facility is is interest-free for the first year, and 5.9% thereafter – against NatWest’s rate of 19.99%.
The Bad A&L has been one of the worst offenders when it comes to letting savers down. There have been five quarter-point rate rises since last August, yet the bank has not passed on the full increases to all of its savers. Those with its Phone Saver account, for example, have seen their savings rate increase by only 0.7 points.
Watch out for A&L’s Direct Saver. It seems good because you can earn 6.3% above £1,000. Buy you earn no interest in any month you make a withdrawal.
THE LEAGUE TABLE
The top performers
Alliance & Leicester Scores with a market-leading current account paying 6.5% in the first year on up to £2,500, and mortgages that often feature in the best-buy tables.
HSBC The best investment range on the high street, although you should still watch out for catches in its savings accounts.
Mid-table mediocrity
Abbey One of the best cash Isas on the market, but its performance is let down by its investment range, particularly its sluggish £1.3 billion UK Growth fund.
Halifax Its credit card is among the best on the market, but its Liquid Gold savings account, paying just 1.36%, is among the worst.
Barclays A poor current account and savings range is pulled up only by a decent performance from Woolwich, its mortgage arm.
The relegation zone
Natwest Gets the red card because our panel said none of its savings accounts paid decent rates, and its mortgages are almost always beaten.
Lloyds TSB Let down by its poor current accounts, with high overdraft rates and particularly punitive fees if you accidentally fall into the red or exceed your overdraft limit.
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Comments
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I saw this article in the Sunday Times last week, and I thought it was a very poor article. It did not try to compare like for like: for example it does not list current account features across banks so you can compare them. It assumes that people will use one bank for all services, rather than cherry-pick what is best for them, and it doesn't allow for your own personal circumstances. For example, if you are disciplined enough not to go over your agreed overdraft limit does it matter what the unapproved overdraft charges are? (Although I suppose anyone can fall on hard times). And worst of all, it makes no assessment of customer service levels - for example, no mention of Abbey's recent problems with issuing debit cards, e-banking, and failure to run a proper customer complaints procedure. All in all I thought it was sloppy journalism and not at all useful. I did post a comment to this effect on the Sunday Times website, but unsurprisingly they chose not to publish it.0
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I agree with you saxmund re not mentioning customer service.
Personally if I had not been attracted to the Alliance-leicester premier isa ,I wouldn't bother with them and I wished I hadn't been tempted by the incentives.
A&L is being extremely unhelpful since I made a mistake with payment by keying in the wrong A/c number and I am still trying to get my only 50 pounds back without success.They are the worse customer service ever I have to dealt with. However I shall not rest till I get it back.0 -
I agree - for example, why would someone choose halifax's liquid gold (and some people do as their bank account with a pass book) when they offer so many other savings account.
for some banks mortgages were mentioned, but for others they were not
hard to compare0 -
HSBC have a poor savings account similar to the Halifax liquid gold, okay they come with a cashcard for withdrawrals but pay next to nothing on interest, HSBC do have a very good customer service, just some of the savings products like the ISA and the Instant Access (now withdrawn for sale, thankfully) or the Flexible saver let them down. The current account is poor compared to Alliance and Leicester, Lloyds TSB, Halifax and Abbey. but with the HSBC account they dont ask you to pay in £1,000 a month. They are poor on loans too.Had £80,000 in Savings - All GONE!!! BYE BYE:A Single, 27, Aspie, Gooner :A0
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What they needed to do is to present the information as a table and compare each different sort of financial service against the other banks. To be honest, what I want from "my bank" is a cheque account that can be operated easily online, gives a reasonable in-credit rate of interest and/or can have a savings account attached you can easily transfer money to & from, and has good customer service. All other financial services I will happily buy from whoever offers me the best deal.0
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Articles like this are so one sided
They never look at the positives and always take the vocal minority negatives
The fact is the vast majority of customers are happy with their bank and services, they just dont run around shouting about it and theirs no story for the media their
They instead focus on the small proportion of mistakes the fees which wouldnt happen in the first place if you lived within your means
I find it deeply offensive that I could well have to start paying for my banking to cover a bunch of scammers who lived outwith their means
and before the debaters show up to tell us how its all £39 charges for 1p over, !!!!!!!!0 -
Did I misread it or did it have a go at HBOS savings accounts showing it as a poor performer in comparison to the Sainsbury's account!!! Isn't the Sainsbury's account run by HBOS - and showing in the top 5 of quite a few league tables at the moment....
What a barmy article.
I get so fed up with gutter journalism...why is everything being dumbed down in the UK just now.....
sorry getting carried away...0 -
I read the article and I work for the Bank. No idea what they are talking about and experience tells me had the article been written 5 years ago, i would not have disagreed. NatWest is a hugely competitive bank.0
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Did I misread it or did it have a go at HBOS savings accounts showing it as a poor performer in comparison to the Sainsbury's account!!! Isn't the Sainsbury's account run by HBOS - and showing in the top 5 of quite a few league tables at the moment....
What a barmy article.
I get so fed up with gutter journalism...why is everything being dumbed down in the UK just now.....
sorry getting carried away...
yeah but the liquid gold is one of many. they can't get rid or there would be complaints because its a passbook account which acts as a bank account to many0 -
Well, I may be biased but NatWest is 10x better than Barclays.
NatWest is actually interested in their customers and they do not have a hard sell shedule like Barclays has. You always get an employee who has a bad off day and does not go the 100% as required, which is not an excuse but we are all just humans in the end. Plus NatWest has UK call centres and branch access plus you can meet the branch managers.
I know this because I used to work for Barclays and now for NatWest.0
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