Is Halifax about to Do a Barclays?; A Catalogue of Blunders Rocks the Image of One of Our Most Trusted Banks

By Dyson, Richard | The Mail on Sunday (London, England), March 24, 2002 | Go to article overview

Is Halifax about to Do a Barclays?; A Catalogue of Blunders Rocks the Image of One of Our Most Trusted Banks


Dyson, Richard, The Mail on Sunday (London, England)


Byline: RICHARD DYSON

WHO controls a third of mortgages, a quarter of the credit card market and an ever increasing slice of the lucrative current account, investment and insurance business?

It is a British banking wonder that generates [pound]100a-second profits to please shareholders, yet also manages to keep 25 million customers happy.

Until now. Suddenly, the consumer championing 'giving you eXtra' ethos of the Halifax is a little tarnished. In a matter of weeks, one of the best known and most trusted banking brands is beset by bad publicity.

Media analysts say the Halifax name has never been bandied about in such consistently negative ways.

According to Presswatch, which evaluates company profiles on the basis of what is written or said about them in the media, Halifax received almost the worst coverage of all 830 companies it monitors.

Only one other bank received more negative publicity. That was AIB,the Irish bank hit by a [pound]500 million rogue trading scandal.

The negative view represented a total reversal in Halifax's fortunes. As recently as December, the coverage it attracted was positive.

But it has since been reviled in Parliament and the press. The Financial Ombudsman is braced for a deluge of complaints.

Groups as diverse as the Taxi Drivers' Association and the influential Consumers' Association are urging Halifax customers to quit. And if Financial Mail's readers are a representative sample, that is precisely what they are doing.

HALIFAX'S troubles centre on the dual-rate mortgage row. In March 2001, as part of a complicated strategy to guard against competition, Halifax, along with a number of rivals, introduced a second standard variable rate.

This was three-quarters of a percentage point cheaper than its existing standard variable rate.

But Halifax, led by James Crosby, did not allow its 500,000 existing borrowers with capped or discounted mortgages to switch to the new lower rate. Nor did it tell others, who would have been free to switch, that the new cheaper rate was available.

Tens of thousands of customers have complained.

Halifax did not improve matters with a spectacular public relations bungle in February. A training poster entitled We Don't Want urged staff to snub cash-intensive business customers, such as window-cleaners, taxi drivers and market traders.

The reason? Their accounts cost too much to run for it to be worthwhile for the Halifax.

Then Halifax announced a half hearted climbdown over the mortgage debacle by unveiling a package of partial refunds to just 10,000 borrowers.

Some were sent [pound]100 for their trouble and others were told they would get nothing. …

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