Savers and borrowers in Scotland who banked with HBOS before its 2008 demise are being denied access to the more competitive deals promoted in Halifax branches in England and Wales, a disparity that has begun to anger Scottish customers.
Research commissioned by The Scotsman showed that the products offered in Halifax branches south of the Border are increasingly likely to be better than those in Bank of Scotland outlets.
The HBOS brands were broken up when the crisis-hit Edinburgh-based bank was bought by Lloyds TSB in 2008, creating Lloyds Banking Group. Bank of Scotland, Halifax and Lloyds TSB all operate separately under the umbrella of taxpayer-backed Lloyds Banking Group.
But while Bank of Scotland’s savings deals in particular stand up to those offered by many of its competitors, there is some dismay among Scottish customers that it has failed to keep pace with the Halifax.
Under the HBOS brand, customers of both Bank of Scotland and Halifax had access to the best deals offered by each provider, but that is no longer the case.
Kevin Mountford, head of banking and credit cards at Moneysupermarket.com, expressed surprise that Lloyds Banking Group had begun to create differences between the two banks.
“Under HBOS it was pretty much the same products, just under different brands. When Bank of Scotland and Halifax originally came together to create HBOS there was a commitment to one common theme and no one was disadvantaged.”
That has changed, however, and there has been a marked shift in pricing over the past year in particular, said Mountford, with Halifax being positioned as the “challenger” brand south of the Border and promoting increasingly competitive offers.
“They have started to price differently,” he said. “Long-standing Bank of Scotland customers accepted that the original HBOS deal wasn’t to their detriment, but by stealth we are starting to see clear blue water between the two.
“If you can’t access the better products on the high street – and not everyone wants to bank online – you are at a disadvantage.”
One Scotsman reader, Alexandra McDonald, claimed that Lloyds Banking Group is discriminating against customers in Scottish branches.
She had sought a Bank of Scotland equivalent to the Kids Regular Saver account offered by the Halifax. At 6 per cent, the Halifax junior cash individual savings account (Isa), is the most competitive child savings cash product on the market, but it isn’t available through Bank of Scotland.
“It seems that my son is being discriminated against on the grounds of where he lives and precluded from having an account being offered by the same institution that owns Bank of Scotland,” said Ms McDonald.
Her complaint not only prompted other readers to get in touch, but highlighted a gap slowly opening up between the products sold by the two banks.
The Kids Regular Saver is one of 19 Halifax savings products – the others are all fixed rate bonds – that boast a higher rate than the most competitive Bank of Scotland savings product, according to Moneyfacts. Below the 6 per cent kids account the Halifax offers fixed saver products over terms of three, four and five years with interest rates ranging from 3.83 to 4.25 per cent. Bank of Scotland’s four-year fixed-rate Isa, paying 3.8 per cent annually, is the top ranked savings deal from that brand, but falls short of the 4.15 per cent paid by the Halifax equivalent.
The same applies to easy access cash Isas. A year ago both brands offered a rate of 3 per cent, but Bank of Scotland has reduced its return to 2.8 per cent (although it remains one of the most competitive on the market).
It’s a similar story for customers taking out credit cards with Bank of Scotland, as the Halifax Clarity Mastercard, at a rate of 12.9 per cent, outstrips comfortably the cheapest Bank of Scotland card, which charges 16.9 per cent
The difference is far more marginal when it comes to personal loans for existing customers. On five-year loans over three and five years Bank of Scotland charges rates of 20.9 and 9.9 per cent respectively, while the Halifax rates are 20 and 8.8 per cent, said Moneyfacts.
There have been subtle changes to current accounts too, though the range of account types and benefits makes like-for-like comparison difficult.
“Bank of Scotland’s current account range did replicate the Halifax current account range but is now much more similar to that of Lloyds TSB for new customers,” said David Black, banking expert at Defaqto.
Lloyds Banking Group said that because Halifax and Bank of Scotland have their own products and services available exclusively within their own branches, there will be occasions when the rates will differ.
A spokesman for Lloyds said: “Halifax and Bank of Scotland now operate independently, offering their own products and services which are available exclusively via their own branch, internet and telephone service channels. As such, the products offered by each business will likely have different rates.”
On this evidence, however, they tend to differ in favour of customers south of the Border.
A spokeswoman for Moneyfacts said: “Although both Halifax and Bank of Scotland come under the same banking license of Lloyds Banking Group, the brands have been kept separate, as have the product ranges.
“This seems to have resulted in a certain amount of disparity for the customers of Bank of Scotland who by going to their own bank will be offered loans and credit cards at higher rates and some savings accounts at lower rates.”
For customers it’s a reminder of one key lesson, according to Defaqto’s Black: “It’s always worth hunting around for the best deal, and with the proliferation of best buy tables, it’s not too arduous a task to do so.”