Enough Is Enough, Say Bank Customers as They Look for Ethical Alternatives; PERSONAL FINANCE Jeremy Gates Looks at the Nation's Money Issues and Reports on How More Consumers Appear to Be Taking Their Custom to 'Ethical Banks'
ALTHOUGH departing Barclays chief executive Bob Diamond agreed to limit his pay-off to pounds 2m this week, his dramatic fall seems to be proving a vital influence in getting people to switch bank accounts.
For years, consumer groups have urged long-suffering bank customers to take their business elsewhere - with limited effect.
Reports that Diamond awarded himself pounds 120m in pay and bonuses in seven years - while the share price was hardly impressive - might have finally done the trick.
Along the high street, new rivals to big banks are sure they can do a better job. They are boosted by the fact that switching banks is easier these days, so your new account should be fully operational within 20 to 30 days.
Since Christmas, website Move Your Money UK (www.moveyourmoney.org.uk) says that 80,000 savers a month have been leaving the banking giants.
Meanwhile, Nationwide, Britain's biggest building society, has launched a major "On Your Side" campaign, boldly presenting building societies as the perfect antidote to the big banks. Kevin Mountford, head of banking at comparison site MoneySupermarket.com, says: "Without doubt, recent problems in the banking sector have prompted some bank custom-ers to vote with their feet. We have seen a 25% uplift in the number of searches to the current account channel." Nationwide confirms an 85% increase week-on-week in the number of customers opening and transferring their main account online; including customers who switch accounts in branch, the society has seen an overall rise week-on-week of 26%.
John Crossley, head of current accounts at Nationwide, said: "The sharp increase in the number of customers switching accounts to us highlights our commitment to being the challenger brand to the big banks." Yorkshire, the second biggest building society with 3.3 million members (540,000 borrowers) and the main brand of Chelsea, Barnsley and Norwich & Peterborough (N&P) building societies, confirms a similar surge in current account business.
Yorkshire Building Society spokesperson Tanya Jackson says: "We're trying to quantify the impact that recent events (insurance mis-selling, IT problems, the Libor scandal) have had on our business and customer transaction levels; so far we've identified an increase in branch activity of about 10%.
"There also has been an increase in account openings, with strong demand for the Triple Access Saver, our traditional passbook account." Demand is strong for N&P's Gold Classic Current Account: the number of applications doubled in the past week, both online and in branches.
The Gold Classic account provides free overseas debit card transactions as standard, which could save almost pounds 12 in the cost of each withdrawal of pounds 250-worth of local currency in an overseas ATM compared to other providers.
Other benefits for N&P Gold Classic customers, who must pay in a minimum of pounds 500 per month, include free cover for cards and keys worth pounds 32 per year; free pounds 250 overdraft for six months (subject to status); a smooth switching guarantee with possible pounds 50 compensation if things go awry; and a single, competitive overdraft rate (17.9%) for both authorised and unauthorised balances.
Ewan Edwards, head of current accounts at N&P, said: "A high proportion of the society's new current account customers have switched from Barclays and NatWest and we believe this is clearly in reaction to the recent financial scandals and criticism of the big banks." At The Co-operative Bank, with 1.3 million current account holders, the number of switchers has jumped too; its internet bank, Smile, shows high customer satisfaction levels.
Robin Taylor, head of banking at The Co-operative Bank, said:: "We've seen a 61% increase in applications over the last three weeks and customers appear to be looking for alternatives in the banking industry. …