It seems that barely a day goes by without some seemingly untoward goings-on in some of Britain’s high street banks being revealed in the newspapers. With this in mind, it’s perhaps no surprise that many consumers are becoming a bit cynical about the banking system in general.
One apparent upshot of this disquiet is that many Brits are reconsidering their personal banking arrangements – with a reported rise in the number of individuals who are making enquiries about ‘ethical banking’, as you can see here. Ethical banking can be a somewhat unclear term, with it being used as an umbrella description for those financial institutions that refuse to lend to firms they see as operating unethically, or investing money in projects based on the same criteria. That said, it’s not just the ethics of some high street banks that are being scrutinised by customers, many are realising they can get a better deal elsewhere, too.
One big trend over the past few years is for banks to offer pay monthly accounts to customers who are then eligible to access a benefits package. These typically include insurances such as mobile phone, travel and card insurance and other services such as emergency home cover or breakdown cover. Recently the Financial Services Authority (FSA) has issued rules requiring banks and building societies to more closely examine whether those who take up or are offered these accounts are best suited to them. In response to a mounting number of complaints from consumers who felt they or others they know were mis-sold these accounts, the FSA outlined a necessity for institutions to check annually whether customers truly benefit from aspects of their paid for account.
Sheila Nicoll, FSA director of policy, said: “These products are often referred to as upgraded accounts but if you end up paying for an element you can’t claim on, it’s money down the drain.”
To read Ms Nicoll’s full statement, see here.
Of course, there is no suggestion that there are not many thousands of customers benefitting from this type of account and there are other types of paid accounts available. For example, some institutions charge a monthly management fee but don’t apply the hefty charges that have become the norm on the high street should you go overdrawn.
For those who’ve decided they want to look beyond interest rates and paid for benefits they may be able to source more cheaply elsewhere, information provided by the Fairbanking Foundation may be of interest. The Foundation is a not-for-profit organisation that assesses banks and their products in order to judge the measure of financial well-being they offer to customers.
The current account offered by Secure Trust Bank is one example of a product that has been rated by the organisation. The bank was last year awarded a three-star fair-banking mark by the charity. This was given in recognition of the bank’s offering of solid budget support and efforts to keep individuals up to date with their financial situation.
If you think you might be paying over the odds for a packaged account or think you should be getting more support from your bank, now may be the time to investigate the work carried out by the Fairbanking Foundation and their partners