Jeff Salway: Banks have to tackle roots of poor service

THE rate at which complaints about banks are rising takes me back to the financial crisis and the manner in which the figures quoted in the bailouts just stopped meaning anything.

Complaints to the City watchdog rose by another 21 per cent in the second half of last year, hitting 12,000 a day. Before long the FSA will reveal that we’re all filing complaints every day and no-one will blink an eye.

The latest figures are a little misleading because the picture is marginally less dire once complaints about payment protection insurance (PPI) are taken out. That may sound like suggesting that crowds in the Scottish Premier League are good as long as you take out every team that isn’t Rangers or Celtic, but this is a time for grasping the positives.

Overall, complaints about current accounts, savings and other banking products fell last year, despite a continued rise in grievances regarding Royal Bank of Scotland and Bank of Scotland.

Yet we can’t ignore the PPI fiasco, which continues to run and run at the cost of billions to the banks responsible. The industry’s response has so far been feeble, so it was encouraging to see Lloyds Banking Group last week unveil a new complaints-handling platform. The system will track complaints made by phone, online and in branches by Bank of Scotland, Halifax and Lloyds TSB customers.

Staff will be able to deal with complaints however they were made, whereas customers can’t currently go into a branch and raise an issue relating to a complaint made online, for example.

In the big picture, however, this is mere window dressing. Complaint levels and the generally poor handling of them will remain unacceptable for as long as the culture remains unchanged in the high-street banks. From senior management downwards, there’s too little engagement with the complaints process, from the reasons for grievances to the handling of them.

Even after the PPI scandal has cost banks billions, the emphasis remains on managing refunds and discouraging complaints, rather than addressing root causes and ensuring customers are treated fairly. Another mis-selling scandal and those complaints figures will resemble the losses posted by the culprits.

Ignore Isa hype

IF PREVIOUS years are any- thing to go by, many investors are leaving it to the last minute before deciding what to do with their annual Individual Savings Account (Isa) allowance. That suits fund management companies perfectly, justifying promotional campaigns pushing the latest flavour of the month.

Yet flavour of the month does not fit with the long view that most investors should stick to, and that means opting for funds that would never be considered fashionable.

Income is still the biggest single requirement, and for most people that will continue to be provided by UK equity income funds.

Few would dispute that we face at least another three years of volatile market conditions – providing both growth opportunities and nervous moments – and that most growth will come from overseas, most notably emerging markets. With that in mind, we can expect a lot more money to go into global income funds this year. And that would be based on logic and meeting real needs, not Isa season hype.

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