Jeff Salway: Bank bugs a step too far for angry customers

Published on 24/06/2012 01:53

YOU can treat them like you just don’t care, rip them off, exploit them and even take billions in taxpayer money to stay afloat, but they’ll stay loyal.

Prevent customers from accessing their accounts and leave them without cash, however, and you may finally stretch their patience to breaking point.

It’ll be intriguing over the coming weeks to see how Royal Bank of Scotland customers respond to technical issues that have now dragged on since the middle of last week. Judging by social media, many angry customers intend to take their business elsewhere once the issue has been resolved.

The threats have been made before. But for all the ire over the actions that led to RBS’s bailout, the fallout from Fred Goodwin’s pension payoff and the fury at payment protection insurance (PPI) mis-selling, there’s been no surge of customers switching away.

The problems of the last week may provoke a more pro-active response. In RBS’s favour, however, is not only the fact that other major high-street banks have experienced technical glitches of varying severity over the last year, but also that it is, so far, handling it better.

By keeping branches open longer, extending Saturday hours and opening branches today, RBS and NatWest are simply doing what they should do. Yet it still comes as a surprise when a bank responds in a way that doesn’t simply enrage customers even further.

Last year, thousands of Bank of Scotland customers were left seriously inconvenienced by a botched merger of the Bank of Scotland and Halifax systems. It left many people unable to access their accounts, including a good number of small business customers.

I spoke to quite a few Scotsman readers affected by the issue, and it was clear that their anger was stoked largely by the way in which the bank handled it.

Three days after the technical difficulties emerged, the bank said anyone unable to log on to their account could go to their branch or use the phone banking service. A statement of the obvious maybe, but not what frustrated account holders wanted to hear.

It claimed the following day that the glitch had been fixed, but it became clear days later that some commercial customers were still without online banking, causing huge disruption to business.

Now it’s the turn of RBS to find out that if you close branches and make it virtually impossible to speak with a fellow human being when you phone your bank, you’d better not make a mess of your computer systems and online banking. A glitch can be tolerated, although it will doubtless send some customers elsewhere. Fail to deal with it properly, however, and the bank will really struggle to restore confidence in its ability to deliver.

That includes making sure that anyone who lost out as a result of the glitches is compensated. Banks are also obliged to refund any charges that arise from the error.

More complicated is the impact on credit records. Anyone who has missed a bill payment due to the glitch could suffer damage to their credit history, making it harder and more expensive to take out loans and other credit in the future.

The latest technical difficulties may well be fully resolved over the next couple of days, but for some people the fallout will be far more protracted.

Winners and losers

STEVE Webb has proved to be one of the more clued-up pensions ministers of recent years, although that isn’t particularly difficult. But he’s betrayed a certain naiveté in his comments of late.

Last week, he claimed the increase in the state pension age could be offset by getting more people to take out enhanced annuities.

He’s got a point, on the face of it. Far too few people who qualify for enhanced annuities – which pay out more income to those in ill health or with lifestyles that could compromise their longevity – are aware of them.

Unfortunately, the more people who take out enhanced annuities, the lower the incomes for the remainder, because their funds are in the same annuity pool. For every winner, in other words, there effectively has to be a loser.

Webb is right to highlight the value of enhanced annuities, but to claim they can help offset the increase in the state pension age is worryingly simplistic for someone in his position.

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