UK banks slammed on customer service

April 28th, 2010

Excellent news! High Street Banks are being taken to task once again. The Financial Services Authority (FSA) has launched a blistering attack on their levels of customer service and there is a whiff of large fines in the air.

It has not been confirmed yet which banks are mentioned but from reading between the lines it appears that Barclays, Lloyds, HSBC, RBS-NatWest and Santander are in the firing line.

It is specifically the way in which they deal with customer complaints that has raised the ire of the FSA. Two of the banks are being investigated further and it is these two that are likely to face fines, the others have merely ‘pledged to improve’.

In what will no doubt be familiar to many readers from their own experiences with making complaints, the FSA has noted poor decision making, a lack of interest from management and bonus schemes that aim to inhibit staff paying compensation as the main failings.

About three million complaints are made against banks in the UK each year. I wrote on this blog last year about how there were widespread reports of banks deliberately making the process of complaining difficult in the hope that customers will give up.

The Financial Ombudsman Service (FOS) was quoted as saying customers were being dealt with “dismally” and eventually found in favour of more than half the customers whose complaints it dealt with.

The FSA sampled 600 complaints to the banks and after investigation has demanded the banks change their processes.

The complaints were wide ranging but mostly dealt with standard day to day banking problems. The mis-selling of payment protection insurance and overdraft charges were dealt with separately.

In an apparent sweetening of the pill the FSA did mention good practices in some parts of the banks which, apparently, show that they can deal with their customers properly if they try. (!?)

The FSA makes the point that one of the main problems is front-line staff not being given enough time or training to deal with complaints in the proper manner.

The detailed figures show that a whopping 36% of complaints were investigated poorly or inadequately, especially by staff in branches or call centres and 18% of decisions were wrong and unfair to the customer.

In addition to these shocking statistics the compensation, when offered, was not enough, correspondence was inadequate and complaints were dealt with too slowly.

I imagine that no-one is surprised to read this, the overwhelming focus of most banks on the sale of financial services rather than customer service is obvious to all. Hopefully now the banks will feel they have to up their game, although I’m not holding my breath.

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And Brown gives us inflation…

April 21st, 2010

The consequences of the Government’s ‘quantitative easing’ policy have been revealed this week as the UK inflation rate rose to 3.4% in March.

The rise in the Consumer Price Index (CPI) inflation rate was bigger than analysts had been expecting and the Retail Price Index (RPI), which includes housing costs, similarly rose sharply in March.

Higher petrol prices were one important factor in rising consumer prices according to the Office for National Statistics (ONS). Petrol prices increased because of the relative weakness of the pound and higher refining costs, as well as the increasing price of oil.

It is thought that the rise in VAT, which went back up to 17.5% in January also contributed to the spike in inflation.

The ONS said increasing air fares, especially on European flights, rising food and non-alcoholic drinks prices, and higher clothing and footwear costs also played a part.

Despite the sharp rise in prices, some analysts believe the rate of inflation will fall again in the coming months as weak economic growth and high unemployment soften price rises.

The Bank of England (BoE) is expected to keep interest rates low as part of the plan to stimulate growth as the economy recovers from the recession.

UK interest rates have been at a record low of 0.5% for over a year. The policy is thought to have helped bring the UK economy out of recession in the last quarter of 2009, when it grew by a somewhat measly 0.4%.

However, if prices continue to rise sharply, the Bank’s Monetary Policy Committee (MPC) may have to raise rates anyway in order to stop inflation getting out of hand and wrecking the nascent recovery.

For me this should be the final nail in the political coffin of Gordon Brown. The ONS is unlikely to turn on its master, yet, but it’s clear from reading between the lines that the underlying cause of the inflationary pressure is Brown’s policy of, in effect, printing money.

Through a spiralling burden of debt, both public and private, Brown made the people of the UK think they were living in times of prosperity for the past 13 years. Now the bubble has burst and we are left with a culture of debt that will be around the collective neck of the country for at least a generation and enormous, unsustainable Government spending which needs to be cut when, had we been better prepared, we could be increasing it.

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Should marriage be recognised in the tax system

April 14th, 2010

Much attention has been given in the media recently about the Conservatives’ plans to give four million married couples and civil partners an annual £150 tax break. This is an interesting area as it is where personal finance and personal relationships overlap and has also been the subject of much disinformation.

The details of the plan as they currently stand are as follows. The tax break would apply to basic rate taxpayers earning under £44,000 where one partner does not use their full personal tax-free income allowance.

The £550m a year cost would be funded by a levy on banks. Regular readers of this blog will appreciate how much that cheers my heart.

Many people may be wondering why this break is given to married couples (including those in civil partnerships) and not other families, and the Conservative response is that the tax break is to ‘support commitment.’

The idea is that the tax break acts as an incentive and support for families as the basis of a larger society, where it is recognised that it is healthy for children to grow up with two parents in a stable home.

The Conservatives also point out that the measure will, in fact, bring the UK into line with many other developed economies which allow tax allowances to be transferred within families.

The problem with the plan, which has been pointed out ad nauseum by the opposing political parties, is that it does not affect single parent families, which are often in the lowest income brackets.

This is true as a simple statement of fact, although it is also quite disingenuous. The aim of the married couples tax allowance is specifically to keep families together, or at least go a small way to furthering that aim.

Other measures the Conservatives are proposing, not least the removal of the National Insurance increase, are targeted specifically at the very poorest in society and designed to ensure they receive the required amount of government support.

As I understand it, the Conservative position is this. Marriage is the ideal situation in which to bring up children and as such should be recognised by the tax system. However, it is not a situation available or appealing to everyone and they should not be punished or discriminated against in any way.

As such it is a policy I support and hope to see implemented after the 6th May.

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