Banks Under Pressure As Complaints Soar

UK banks are under scrutiny, as it emerged that complaints about high-street bank rose by 50% last year, according to the Banking Code Standards Board (BCSB).

The BCSB, responsible for monitoring the banking industry’s customer service code, revealed that during 2005 it received 3,500 complaints related mostly to interest rates and penalty charges. The BCSB also expressed concerns that this could be ‘just the tip of the iceberg’ as many consumers complain direct to the Financial Ombudsman Service, which receives in excess of 100,000 complaints a year.

The industry hit back in light of the figures by denying it indicated growing customer dissatisfaction with banks, claiming the increase was due to customers being more aware, largely due to recent advertising campaigns, of how to report problems.

According to a spokesman for the British Banking Association, the introduction last March of a new voluntary banking code is responsible for the increase.

“ The new code led to the distribution of leaflets to current account customers, providing the address of the board and giving tips on how to complain and who to contact,” he said. “ That made it easier for customers with complaints to bring them to the attention of the board. Consumers are only really doing what we asked them to do – to provide feedback and raise issues of concern.”

However, this has done nothing to dissuade consumer groups from renewing calls yesterday for banks and credit card providers in the UK to help avoid customers having to pay penalty charges.

The BCSB received 1,200 complaints during the last six months of last year. These complaints included unhappiness about security, bank’s mistakes and the treatment of customers who were suffering financial difficulties.

Those banks that have failed to meet the eight-week deadline for dealing with complaints may end up facing action by the FSA.

The BCSB’s figures serve as more bad news for the credit industry in the UK after the Office of Fair Trading recently revealed that consumers were being charged £300m a year in unlawful penalties on credit cards. The OFT added that this also applied to overdrafts and store cards.

Richard Mason, director of online comparison site moneysupermarket.com, said: “ Card providers rely on the fact that many customers will never get round to setting up a direct debit to repay the minimum amount on their credit card.

“ When customers subsequently miss payments and are faced with penalty charges, the providers are in a position to bring in valuable revenue.”

Alisdair Milton
3rd May 2006

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