Jeff Salway: Anger growing over behaviour of banks

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WE CAN call it the “Goodwin effect” if you like. I’m referring to the growing propensity of people in Scotland to complain about the banks.

It used to be that we’d put up with their incompetence, but the financial crisis exposed a culture we’re less willing to tolerate.

That, and the payment protection insurance (PPI) mis-selling phenomenon, help explain why people in Scotland made a record number of complaints about financial services companies last year.

Scotland accounted for almost one in ten complaints handled last year by the Financial Ombudsman Service (FOS), which received 180,000 inquiries from north of the Border. Glaswegians are more likely than residents of any other UK city to take a complaint to the FOS.

Those PPI complaints accounted for a huge proportion. But anyone assuming that’s where the story starts and ends is mistaken. Away from PPI, the latest statistics from the FOS also paint a picture of a country that is fed up of the attitude taken to customers by the biggest banks in particular. Where once they’d respond to poor service or unfair treatment by having a private grumble and maybe writing to the local newspaper, dissatisfied customers are now more likely to take to Twitter or go to the ombudsman.

Current account complaints are rising, and may well soar over the coming year as more packaged account holders realise they’re paying monthly fees for benefits they don’t use. Rules that took effect in March mean providers must now write annually to customers reminding them what they’re paying for.

StepChange Debt Charity reports that banks are the second biggest source of debt problems, behind payday lenders. Current accounts are again prominent, with a dramatic rise in cases where banks are denying the customer’s legal right to cancel continuous payment authorities, which are used by payday lenders to collect repayments.

This is just the tip of the iceberg. For too long we’ve let the banks get away with it. But there are encouraging signs that we’re beginning to grumble a bit more loudly.

Savings tax you can do without

Savings rates are low enough without unnecessarily paying tax on the paltry income you get. And it’s not just a failure to use annual Isa allowances that results in savers paying more to the taxman than they need to.

Many people are needlessly paying tax on savings because they don’t realise they should be exempt from it. Those on incomes below the personal allowance threshold – a growing number as the personal allowance continues to rise – can apply to have their savings income paid free of tax by registering through the R85 form.

Many of those exempt from savings tax are pensioners, hit hard by the loss of savings income in recent years.

Banks and building societies are useless to the point of negligence when it comes to letting people know about this. Fewer than one in ten high-street branches was able to provide the information about the tax on savings in a mystery shopping exercise by the Low Incomes Tax Reform Group.

The government and HMRC are no better. Yet with so few accounts keeping pace with inflation, keeping the 20 per cent cut that usually goes to HMRC can make a material difference to the income you get. Reclaiming overpaid tax can produce a modest but useful windfall, particularly as you can claim back up to four years.

To find out if you’re entitled to get your savings interest tax-free and how to apply, go to www.hmrc.gov.uk/calcs/r85.

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