Banks - Treating Customers Fairly (Badly) 2

Following yesterday’s blog, about how I feel banks are not really entering into the spirit of the FSA's 'Treating Customers Fairly' initiative, just a quick follow up on bank advertising and marketing tactics.

I should be clear, I am not naïve. I understand the power of marketing and advertising as much as the next person. What irks me is the way that banks and other direct financial product sellers operate in a vacuum and in a fashion that independent financial advisers don’t.

So I am happy if they want to play in the same space as retailers and have an advertising battle a la the supermarket price comparisons (eg best interest rate rather than cheapest baked beans) but it troubles me that they seem to almost mislead with their advertising safe in the knowledge they can hide behind the ‘small print’ and wriggle out of complaints.

This year the banks have had more complaints than ever made against them over product sales (excluding anything to do with the credit crunch)

It is not that these products are necessarily bad (although some are), it is just the constant cross selling of almost anything to anyone (just like my post office gripe yesterday) who walks through their door.

So as promised, I trotted down Putney High Street, read a paper and watched a bit of prime time TV to select a few bank ads that irked me: (It didn't take long!)

TV: Halifax – radio jingle advert telling us how much they love their customers – so much so that they will give you £5 a month if you pay in £1,000 a month and have your current account with them.
Dig a bit deeper – so that is 0.5% of the £1,000. You get nothing more, for any more saved. Plus they know have you as a customer to cross sell – and they make a great deal more than 0.5% profit margin on all the other stuff they’ll now bombard you with!
But it gets better. The ad even tries to ‘upsell you’ to their ‘rewards’ account. In the background the radio is now playing ‘Lucky You’ as they tell you all the rewards you can have. Only in the small print at the bottom of the screen is it now saying you need to pay them £12.50 a month for these ‘rewards’ – Lucky You!

Newspaper: Abbey/Santander – “Earn £100 and 5% for 12 months when you switch to Santander” – little table showing how this deal appears better than 5 other banks. Doesn’t mention anywhere that First Direct, for example, will also give you £100 to switch to them! As with Halifax, no interest on anything over the £2,500 and you need £1,000 minimum. I think it would be great to just play them at their game, switch a few direct debits, pay in the money, and take the maximum £1,500 interest! Again, I don’t have a problem per se with the deal, it just irks me that ‘terms and conditions apply’ yet the adverts (press, TV, billboard) mainly show the £100 and 5% figures in giant neon numerals on top of a building. And if anyone complained about being mislead, the small print would ensure Santander would have done no wrong.

High Street : NatWest – the charter. Don’t get me started. On the one hand I applaud their intention, if true, to become the most ‘helpful’ bank. Having more branches, more branches open, longer hours etc are all things to improve what they do. But on the other hand, woolly commitments to ‘try’ a bit harder at stuff are not so impressive. Nor is the amount of volunteer days/hours they say they give when divided up amongst the number of employees and I’m afraid the NatWest in schools leaves me feeling a little cynical over whether they really are trying to help educate the nation or perhaps just be first past the post when the time comes to open student accounts?

Personal experience: three clients in the last three months have approached me saying they were going to take out a product recommended by a bank employee. Without going into the details, constant theme across all three (a high street bank, a smaller building society, a private bank) were bank employee bringing up the subject when another item was the main discussion, the investment product was complex and the complexities were not explained but boiled down to an eye catching headline (see Santander above), the product was sold as an alternative and comparable to cash but clearly is no such thing, elements of the product not at all suitable for the client (time scales, risk factors etc)

So to bring things back to the start, I don’t have an issue with the banks, or the products themselves - and certainly not the staff personally – they are just sales targeted and told what to sell – I assume they have mortgages to pay too…

It is just that clients are being shown (or worse, just told and not shown) attention grabbing headlines: “5%”, “34% over 4 years”, “no risk” and it is not the whole story.

In summary, I don’t believe the banks are being anywhere near as fair, friendly or helpful as their marketing and adverts would have us believe. But perhaps I am just naive...