Business banking news review: week ending 30 Jan 2014
The UK’s banks and building societies have been channeling their inner Ebeneezer Scrooge lately, enraging their customers in massive record breaking droves.
British personal and business bank account providers have been stubbornly clinging to abysmal interest rates on savings products, reportedly amassing more than £130 billion in capital as a hedge against bank failures. The past 12 months saw cash reserves balloon by 20 per cent, all in savings accounts that carry little to no interest and that leave banks and building societies with absolutely no impetus to attract new deposits with headline rates.
The behaviour has shocked and appalled nearly everyone, especially those customers who have been praying for a reprieve from the Bank of England’s paltry 0.5 base rate – a decision that was made half a decade ago in the wake of the credit crisis and resultant economic downturn. However, instead of taking it lying down customers have taken up arms according to another report revealed this week by the Financial Ombudsman Service.
It turns out that the FOS has seen a 155 per cent increase in complaints from customers holding paid-for accounts, and for good reason – some of these customers are paying as much as £300 per annum for things like breakdown cover and travel insurance, often without knowledge of the extras or without even wanting them in the first place! In fact, one out of three packaged account holders don’t even avail themselves of these extras, the FOS found – and the number of complaints has absolutely exploded seemingly overnight.
12 months ago, there were maybe around 40 complaints made every week by paid-for account holders. However, there have been an eye watering 3,107 made over the past nine months, and it’s easy to see the writing on the wall: this is easily going to turn into the next PPI mis-selling scandal. This is serious business, and even these High Street banking institutions that are normally oblivious to the pain and suffering of their customers are going to have to sit up and take notice of the massive glut of complaints. I know it’s hard to believe that Government regulators can actually rein in the special brand of arsehole that sits on the executive board of a major bank or building society, but sometimes things are so egregious there’s no avoiding them – and this is definitely shaping up to be one of those instances.