Hold your bank to account over errors

DISGRUNTLED customers who complained to Royal Bank of Scotland in the last few years because of an error on their account and believe the issue was not satisfactorily resolved could submit their grumble again after the bank was fined nearly £3 million for failing to deal with customer complaints appropriately.

Banks and building societies receive more than two million complaints a year. They are obliged by law to sort these problems out and, where appropriate, compensate account holders.

However, it can sometimes seem more pleasurable to walk through fire than to get your bank to put right a mistake.

Until now. City watchdogs at the Financial Services Authority have drawn up their guns on the side of the consumer. Determined that banks should be held to account for their blunders, they have hit Royal Bank of Scotland Group, which includes NatWest, with a 2.8m fine.

The FSA said the fine would have been larger, at 4m, had the bank not put its hands up at an early stage of investigation. RBS has agreed to undertake an extensive review of all parts of its complaint handling arrangements under the supervision of an independent authority.

But RBS is far from the only institution to stonewall genuine customer complaints. Its shortcomings came to light after the watchdog reviewed the way the entire industry approached customer complaints. This work disclosed that five of the biggest banking groups (ie virtually all of them) were failing to treat customers fairly to a greater or lesser extent.

All have been required to improve customer service, with the RBS fine and humiliation partly a warning to the others.

Certainly, they have now all been threatened with disciplinary action unless customers' beefs are taken seriously. Shortcomings at another bank are believed to have been so grave that it too is in line for a fine, although investigations at that institution are still under way.

The charge sheet against RBS is not good reading, particularly as the bank historically prided itself on customer service. The FSA examined 120 complaints files and found the bank delayed doing anything about customer dissatisfaction.

When it did, complaints were not properly treated and information was not adequately gathered. Even when it was, customers were not given a fair outcome. In many cases customers were not told they could take the complaint further to the Financial Ombudsman if they were unhappy with the outcome. This is a cast-iron obligation under the regulations.

Customers who believe they were not fairly dealt with after making a complaint against RBS or NatWest should consider contacting the bank again and ask for their file to be re-opened, or consider taking their complaint to the Financial Ombudsman.

Margaret Cole, the FSA's managing director of enforcement and financial crime, said: "We expect firms to treat customers fairly and that consumers can be confident that their complaints will be dealt with properly. The failure of these two high street banks to deal adequately with complaints put consumers at unacceptable risk and the fine of 2.8m reflects this."

Catalogue of errors

All banks make mistakes from time to time, either as a result of computer glitches or human error, so customers should always check statements regularly to pick up rogue transactions.

Recent system problems include a malfunction by Lloyds' Cardnet system, which operates retail debit card payments. Over the New Year period, customers from a range of banks were charged twice for purchases after a computer glitch. Lloyds says this double charge has now been reversed, and no customer should be out of pocket.

But account holders should check their bank statements carefully. It also promised to repay any penalties or interest incurred if the error pushed customers into the red.

Last July, Yorkshire and Clydesdale banks, both owned by National Australia Bank, admitted undercharging 18,000 mortgage customers after miscalculating bills by potentially hundreds of pounds per month. Some customers were asked to increase their payments significantly as a result.

Santander acknowledged admin gremlins after the takeovers at Abbey, Bradford & Bingley and Alliance & Leicester. The bank says it has been working hard to minimise complaints, which are now falling in number.

Before Christmas, Tesco Bank was forced to refund a customer, a maths professor, with a zero-interest-for-12-months credit card because he claimed it began charging interest after 11 months and one week. The bank is now investigating whether this was a one-off or systemic error.

Keeping your bank right

Check your statements regularly, and if you notice an error, immediately contact your bank or building society via your normal method. This might be at your branch in person, on the telephone, by e-mail or by letter. Keep a copy of all written correspondence and a record of the date, time and, where possible, the name of the person with whom you have a conversation.

If, after a few days, you have heard nothing, follow this up with a formal written complaint. It is important you mark this correspondence as a "Formal Complaint", otherwise the bank may not treat it as such and it will not receive priority. Keep it short, but include all relevant information such as account numbers and transaction dates. Notify the bank that you expect a reply within 14 days, and also inform it that you plan to pursue the matter with the Financial Ombudsman if your issue is not speedily resolved.

The bank has a maximum of eight weeks to investigate and resolve the issue, so you should expect to receive a formal reply by this deadline.

If you are still unhappy, take your complaint to the Financial Ombudsman, which can recommend compensation of up to 100,000 for any loss. It can also award redress for distress and inconvenience on top, which typically ranges from 50 to 1,000. Complaint forms are available from www.financial-ombudsman.org.uk/consumer/complaints.htm or you can write to Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR.