Loyalty - does it have a place?

Haynonnie

In Martin's book "The Money Diet" he has given Chapter 5 the title "Forget Loyalty" and discusses the way in which institutions can make us feel too comfy to realise we're not getting the best deals anymore. I can understand the MSE ethics of shopping around for the best deals but does anybody agree that sometimes you do need a bit of stability?

Maybe my circumstances are a bit unusual (actually they're far from the norm!). By choice, I sold my flat a couple of years ago (I never liked it that much anyway and it was a time bomb construction-wise) and now lead a gypsy-like existance taking temporary jobs with accommodation thrown in and camping at friends' houses in between. It's a great life, most of the time. I've been self-employed for 10 years during which I've always ridden the income white-knuckle ride (I've been down to 16p in the whole world!), so it's not that scary anymore. Luckily I have no debt as I made a few grand on the sale of the flat, which is in Premium Bonds (I can hear the tutting already!).

I do, however, have a problem with getting credit. It was no problem when I was a homeowner. Recently I wanted to take out a new mobile phone contract but it was a no-go at first, being politely declined after the credit check. I'm pretty sure this is because I am not on the electoral register. How legal is it to put a friend's address as my own purely to be on the register so that I can get credit?

What did save the day was my long-standing NatWest current account, which I've had for 10 years and which I use for all my regular transactions. Most of my income over the years has come in as cash which I go and pay into my branch, so I've got to know the staff in my branch very well. They understand that I move around a lot, although I've kept actual address changes on my account down to a minimum, but because they know me as an individual it is not an issue. Although I do have to admit that I'm still having to use a friend's address for most of my affairs.

But anyway, the fact that I had bank statements going back years showing regular payments in and out (including previous mobile contract) managed to persuade the nice man in the shop that I was good enough to be one of their customers. A mobile is essential to me as I have no landline.

I seem to have waffled on a bit, but I suppose my main question is "does anybody have a personal relationship with their bank anymore, and if so, has it been helpful?"

Thank you for taking the time to read this.

Mark7799

On the occasions where it is possible to have a personal relationship, I don't think it can do any harm. In a lot of cases, bank decisions (lending, card issue etc) are usually subject to strict criteria but there can be some grey areas where branches can 'appeal' decisions and a good relationship can only help, especially if the staff member can explain seemingly unusual behaviour by customers.

Problem comes when the staff member(s) move on to pastures new.

CopperPlate_2

I'd have to say that I don't have a personal relationship with my bank. We have no bank now where I live and only the local post office which I use to pay cash/cheques into my Smile accounts so I know the staff there but it's obviously not the same.

I think that banks are keen to reduce their face-to-face contact with customers, and reduce their overheads at the same time, so the days of knowing who works in your local bank seem to be on the decline. Thrown into this is the fact that most actively promote their online ventures more than their branch based accounts by offering higher rates of interest to NOT deal with a human being over the counter. The result is the creation and fostering of a 'business only' relationship perhaps.

For my part, I like to get innovative products, good service and things sorted out when I ask. I couldn't care less whether the person that provides that is on the moon or down the street and if they deliver, then I'll stay a customer. Simple as.

CP

AussieLass

Haynonnie wrote:

I seem to have waffled on a bit, but I suppose my main question is "does anybody have a personal relationship with their bank anymore, and if so, has it been helpful?" Thank you for taking the time to read this.

I know I am not based in the UK but we have a personal relationship with our bank. It's a relatively new bank & it opened in our town around 1990. We were in a much larger bank and got sick of the high fees. I've got to know the different tellers and bank managers that have come and go. We have our own business & in the past we have had trouble with late payments so I've had to ring up the bank manager and ask (beg) that we will have to go over in our overdraft to make wages. They have been fantastic. Never have they charged me extra and have always bent over backwards. We live in a medium sized town so it's quite normal to run into our bank manager down the street and he always says hello and quite often stops to chat. This bank has become pretty popular and now is making huge profits. The rates are still pretty competitive but you probably can get better if you shop around. But why would you bother when the service makes up for any small savings?

Welcome to MSE Haynonnie:hello:

CopperPlate_2

AussieLass wrote:

They have been fantastic. Never have they charged me extra and have always bent over backwards...The rates are still pretty competitive but you probably can get better if you shop around. But why would you bother when the service makes up for any small savings?

My sentiments too. I bank with Smile (for all my accounts, except credit card and I'm with the citi cashback card there - ethical with Smile yes, but a Money Saver at the core) because - as I'm finding out to my cost - most of the other banks are completely useless. A simple request to open a joint savings account for me and my wife with Cahoot has been the most protracted, contrived process I have experienced in a long while. I've been sent three credit agreements for current accounts (!) and two sole name savings accounts have been opened, and still no joint one has materialised. I had half-heartedly thought of going to join cahoot before, but I now compare them to what I get with Smile, and Smile are way out in front on everything. Okay, interest rates are slightly lower, but I can put up with that if I'm getting treated well and I don't have to worry about what's happening to my/with my money.

Again, smile aren't likely to know me from Adam, but they see that I have most of my money with them and have a good credit rating so I'd like to think that there'd be no problem if I ran into financial difficulty or needed a bit of lee-way.

CP

Rikki

I had a good relationship with my banks mortgage adviser and got a great mortgage deal.

For the rest of my banking I am never loyal as when I've needed help its always been "I'm sorry we can't do that". New customers get better deals they want your business.

mrsw

I have been a customer with my bank for over 20 years. When we applied for a mortgage with them, I think it certainly worked in my favour because the lent us more than they would have using the standard lending criteria (3x salary?) because they knew my banking history.

Twopints

Haynonnie - No. (Sorry, couldn't resist!:p) I have been with First Direct for about 13 years and have not regretted the absence of a personal relationship. In fact I do pretty much anything to avoid ever going in to a bank.

As I have been with FD for 13 years they know pretty much all they need to know about my finances. So no to the personal relationship part, but yes to having some stability.

Tim_L

There are certain highly specific situations where having a long banking history may help - appealing a credit rejection being one, though I have to say that it's probably no worse having statements from a number of banks over a period of years to show off than statements from a single bank.

In all other circumstances I can think of, loyalty costs you a good deal of money. Surfing the best deals and introductory offers improves returns drastically.

When mrsw says "they lent me more than they would have done using the standard lending criteria", I'd be a bit cynical. All the bank is interested in is whether you can repay the debt, and in the process make them some cash: having a history with the same organisation really means nothing, as evidence of history somewhere else would be just as good.

The best mortgage deals (in terms of multiples and in terms of interest rates) are generally not operated by banks in any case. So all loyalty has bought here is a non-optimum mortgage rate; the bank may well tell you they wouldn't have offered the higher multiple to non-customers, but I can guarantee that they would offer it to anyone off the street they feel is a good credit risk (and bear in mind that the best deals and inducements always go to new customers).

Similarly with a mobile phone, at the end of the day they are selling you something and are likely to use maximum discretion. It's in the salesman's interest to close the deal. In some cases they may sell you more expensive options as a "reward" for not having a blemish free record, or embarrass you into taking out expensive insurance.

CopperPlate_2

Tim_L wrote:

In all other circumstances I can think of, loyalty costs you a good deal of money. Surfing the best deals and introductory offers improves returns drastically...All the bank is interested in is whether you can repay the debt, and in the process make them some cash: having a history with the same organisation really means nothing, as evidence of history somewhere else would be just as good...The best mortgage deals (in terms of multiples and in terms of interest rates) are generally not operated by banks in any case.

I have to agree with Tim_L. I was due to re-mortgage earlier this year, went to my current lender and asked what they could give me. Nothing that isn't available to a new customer was the reply (Nationwide), and I'd have to pay reservation fees/acceptance fees, etc. Moved to Britannia for nothing (no fees of any kind) on a very similar rate of interest.

At the end of the day, loyalty is a fickle thing - it should be rewarded, but usually isn't or if it is it's done in such a way that many people just think "wow, that was a really good deal" but if you sit down and do the maths and actually see what you're getting, it's probably not that much of a concession the bank has made for you.

CP

Rafter

Genuine loyalty can only be rewarded if banks stop loss leading to attract new customers on the basis that they will then be loyal and profitable in the longer term - a vicious circle.

Agree with many posts here though. I've banked with first direct for 10+ years, know i could do better by exploiting an intro offer or two but can't see the point, particularly given some of the customer service problems others have had with the 'cheapest' suppliers.

It annoys me though when I see Moneysavingexpert exploiting loopholes in intro offers for first direct.

I suppose there will always be intro deals and offers while customers aren't prepared to shop around or switch.

I'm still a bit bemused as to why someone like nationwide who offers consistently better rates than the big banks still has a much smaller market share - huge inertia I guess. Nationwide also reduced their intro offers a couple of years back so that all customers could have a better deal. What happened? They lost market share of new business rapidly!