Personal Current Account Manifesto

Transcription

1 Personal Current Account Manifesto

2 Contents Page Introduction 2 Summary of key recommendations 3 Consumer evidence 4 Next steps 20 Appendix: 21 Research methodology 21 Branch usage research 23 Previous versions of the manifesto: June 2011 December 2012 September

3 Introduction The Consumer Council is working to bring about change to benefit Northern Ireland s consumers. Our aim is to make the consumer voice heard and make it count. We have a duty to educate consumers on their rights and responsibilities and to equip them with the skills they need to make good decisions about their money and to manage it wisely. We want to make sure consumers get the best deal possible, whether that deal is with their utility provider, on the high street or at the bank. The Consumer Council acknowledges the positive changes that banks operating in Northern Ireland have made in relation to the remedies proposed by the Competition Commission and the Northern Ireland Banking Order We also appreciate that banks have voluntarily agreed to maintain elements of the previous order that have been removed in the current Northern Ireland Banking Order 2011 to offer better daily banking services to consumers. However, we are continuing to identify gaps in daily banking services. We have asked consumers to tell us what is most important to them when using the services of banks. In some cases consumers are not aware of services that have been improved and we would urge the banks to communicate improvements using a range of different media. This document is an updated version of the original manifesto published in June In addition to setting out what consumers have told us that banks could do better for them, we have used additional information published by media and other organisations to illustrate and provide evidence to help guide banks. The majority of evidence within has been gathered from consumers, from discussions with the main banks, feedback from advice organisations and reports from the financial regulators. It includes quotations taken directly from consumers to identify a number of areas where improvement in service could be achieved. Summary of key recommendations The key items that consumers have recommended for improvement are: All consumers should be able to open a bank account unless they have a criminal conviction that prevents them from doing so. Branches should have opening hours to suit consumers and provide a full range of services. Staff should be involved in training programmes to deal with every eventuality and be empowered to make decisions to help consumers quickly. Fees and charges should be transparent, fair and proportionate. Better communication around how consumers are protected online and supported to use these services. Contacting the bank should cost the same for new and existing customers. More detail is needed on how much it costs to call using different networks. Communications should be in plain English. More work is needed to revise how changes to products can be more easily communicated whilst remaining within the guidelines from the financial regulator. Product offerings should be presented in a way that helps consumers compare the full range of services and help consumers know that they can switch. The complaints process should be available from all points of contact, verbal complaints logged and actioned and leaflets available in branch displays. A review of packaged accounts, eligibility processes and usage of individual services is needed. Payments options to suit all consumers must be available along with easy to understand information on how to access redress if needed. 2 3

4 Consumer Evidence We would like all banks operating in Northern Ireland to use this manifesto as a basis to make positive changes for consumers to ensure that services meet their needs and expectations. Consumers have told us that the main items that require change are: 1. Access to products, cash and face to face services 2. Overdraft pricing 3. Online banking 4. Written communications 5. Reliability of the switching process 6. Complaints processes that empower consumers 7. Packaged accounts that meet individual needs 8. Payments options These items are not listed in order of priority, but rather in a format that may lend itself to the flow of discussions with banks Access to products, cash, branches and face to face services Northern Ireland has the highest percentage of unbanked individuals in the UK per cent of consumers here do not have an account which allows money to be paid in and direct debits to be paid out, compared to four per cent in the UK as a whole. The Consumer Council is aware that some consumers have difficulty in opening a bank account. No banks are currently offering an account opening service to NI prisoners who are pending release. This has been raised as a necessary tool to help exoffenders resettle in the community, allowing payment of wages, benefits and getting discounts on utility bills by setting up a direct debit. NIACRO offer money management courses to prisoners pending release prior to applying for an account. We have been advised that some consumers who have debts with their existing bank and are about to enter into a Debt Management Plan (DMP) have had problems opening up a new basic bank account with a new bank. This barrier to access is said to be a rising trend. We have had reports that some groups of consumers are still having difficulty in providing proof of address in order to satisfy banks requirements. ID restrictions can act as a barrier to financial inclusion. Consumers have reported being asked to disclose their annual salary when opening a basic account - this is deemed to be unnecessary by consumers. 1. Family Resources Survey 2010/11 published on 8 February Department for Social Development. 4 5

5 All banks should review basic bank account opening services so that all consumers have access. We have been alerted that prisoners pending release do not have access to this service. A process for this must be set up. Consumers who have been declared bankrupt should be able to open a basic current account at any bank. All banks should offer this service when requested. Banks should provide a basic bank account for all consumers upon request, regardless of any debt they are experiencing. Banks should adopt a flexible approach and put in place procedures to deal with exceptional cases where applicants may not possess the usual documents. In such cases, the customer should be asked what evidence of identity/address they can produce. Cases should be referred to a more senior person or special unit that can decide on the acceptability of the evidence provided by the applicant. Banks should remove written questions about annual salary for basic bank accounts Access to cash Free-to-use cash machines are very important for consumers, especially for those on a low income. However, we call on providers to continue to consider installing more free-to-use cash machines into deprived areas of Northern Ireland and to maintain existing facilities. The outstanding areas to tackle are Newry, South Armagh, Craigavon and Pomeroy. Many consumers on low incomes tend to withdraw smaller amounts of money on a more regular basis. Some cash machines only dispense 20 notes which is a cause of severe inconvenience to some consumers and a barrier to accessing cash for others. Banks should consider installing more free-to-use cash machines in deprived areas throughout Northern Ireland. Banks should try to increase the quantity of smaller denomination notes ( 5 notes) that are available in cash machines in order that consumers have more choice in how they manage their money. Banks should make 10 notes readily available in cash machines. A cash machine that only dispenses 20 notes really annoys me, especially when you ve only got a tenner in your bank account. That may seem funny but I ve got kids at university and maybe they need to get 50 out but because the machine only dispenses 20 notes, they have to take out 40 because they don t have 60 in their bank account. Female, Newcastle I always look out for a cash machine that says free cash so that I m not paying to take it out. Female, Dungannon The Consumer Council continues to work with MLAs and LINK to identify suitable sites for free-to-use cash machines in deprived areas in Northern Ireland. The Consumer Council recognise the efforts made to date by local banks and cash machine providers to provide free-to-use cash machines in deprived areas. 6 7

6 1.3. Access to branches Consumers want to have access to their local branch at a time that is convenient to them. Saturday opening appears to be a popular concept, especially if branches could open in the afternoon as well as the morning, offering a full range of services. More recently consumers have suggested that they would like to carry out banking in the evenings. Open on a Thursday night when the shops are open, that would be more convenient. Female, Belfast. I think it s crazy for this day and age banks close at lunchtime, they don t open at 9 o clock, maybe some of them do I don t know but this one doesn t open till half nine and closes at half four. Female, Belfast. Participants felt that banks closing at lunch time during week days was old fashioned and lowered the level of banking convenience significantly. Opening before 9am would allow consumers to visit the branch before going to work in the morning. Opening at 9.30am is not practical to allow consumers to carry out business en route to their place of work. There is concern that banks are closing in smaller towns and rural areas. This leaves people reliant on branch services at a disadvantage. There is also a concern that some consumers who are not able to use telephone and internet banking will be affected financially. Having to travel further to avail of services could mean that opportunities to make their money go further are restricted. 2 Banks should review the opening hours of all branches within their networks and seek to provide a full range of banking facilities during these hours. Consumers view the banks as retailers on the high street and would like branches to be open for longer. 2. The Price of Being Poor, The Consumer Council, June Banks should offer basic current account facilities in Post Offices. Co-operation with Post Office Ltd should be continued and consumers informed and encouraged to use facilities at their local post office when this is convenient for them. In reviewing the effectiveness of branch networks, banks should consider the impact that a closure could have on customers who are not able to use online or phone services. Banks should offer to provide a face to face support meeting with consumers who will be faced with using alternative services such as the Post Office. The Consumer Council also requests that we are informed in advance of consumer communications and press releases as we receive calls from consumers who subsequently look to us for further information Access to face to face services The level of service provision in branches and on the telephone is important to most consumers and they are looking for a consistent approach. Those visiting branches feel they benefit from a personal relationship. Some consumers complained that there were not enough members of staff at the counter to deal with queues. This seems to be particularly prevalent at lunch times. They could see staff working alone at other desks who were not able to help deal with queues at the counter. There is a feeling that branch staff and managers are unable to make decisions at branch level and that time could be saved by empowering staff and allowing them to make decisions rather than referrals. Consumers have complained that they were asked to make phone calls from the branch to a dedicated Used to be you could ring your actual branch but now it s a call centre. You could have rang your own branch and you could have asked if you knew the name of the manager or assistant manager. But now you just get a call centre. Then they bring up the details on a computer and you re just a number then. Male, Belfast It s not the same as when I started banking. I knew the bank manager and if you wanted a loan you had a chat with him and he knew you but it s different now. Male, Ballymena 8 9

7 team to help resolve particular queries and are disappointed that it cannot be resolved by staff they have travelled to meet. The layout and privacy available within branches is important. Some consumers are concerned about discussing their requirements in an open space, feeling that their privacy and security of their information could be compromised. The staff has no power to say alright, you re just a bit late but you ve been coming here for 25 years putting your wages in or you were snowed in. They can t rectify simple problems. Female, Newcastle Sometimes you could be queued up outside the door. Male, Strabane Consumers have experience of being both oversold and undersold products. There could be a risk of offering individuals credit facilities when they have not asked for them. Banks should run staff training programmes to ensure that consumers are given a consistent service and are offered products relevant to them. Staff should be involved in training programmes to understand how consumers cope with financial difficulties or help them manage their account during life changing circumstances, for example after a bereavement or redundancy. Staff should signpost consumers to debt advice agencies for further help if appropriate. Banks should review the layout of branches to ensure that consumers feel they can have private discussions with staff and that this option is offered to consumers immediately if it is thought they may be uncomfortable. Banks should ensure that staff working within the branch are available to help consumers during busy periods to alleviate long queues. Banks should review the decision making powers of branch staff to allow decisions to be made more quickly and conveniently for consumers and be able to explain in detail why some queries must be resolved out of the branch. Banks should provide a facility to allow consumers to contact staff in local branches rather than call centres Channels for contacting banks Mobile telephone calls to numbers that begin with 0845 and 0870 can cost up to 35 pence per minute. Ofcom are working to help consumers understand how much it typically costs to make calls to various numbers. Consumers complained that they had to choose up to five options in a number recognition facility and then wait for several minutes to speak to an advisor. When consumers are working though a complex problem with an advisor that will require a number of follow-up calls, they would like to have access to a direct dial telephone number and know that they can speak to the same advisor at agreed times of the day. There have been occasions where a series of letters related to the same subject have been sent to consumers and each of them has given a different telephone number to contact. There is an appetite for communication to allow consumers who work standard hours to leave messages for staff to respond to them at a convenient time. Consumers feel that this would be a better use of their time rather than queuing in a branch or in a telephone queue. Contact by telephone should always offer an option to speak to a member of staff at any stage throughout the number recognition process. Banks should review Ofcoms s guide for consumers to understand better the cost of calls for various numbers, as well as a review of the numbers that they offer consumers for each service. 3 It would be preferable to offer 0800 numbers or 028 numbers for those using mobile telephone contracts If you could somebody you d be quite happy to wait for a day to get a response. One it s not costing you any money and two you can go and do something else. Male, Dungannon 10 11

8 Banks should review standard letterheads to ensure that they include the correct telephone numbers for staff working with consumers on complex issues. One point of contact would be sufficient for consumers. Recognising that there may be limitations to what can be discussed, banks should offer customers a secure contact service. For example, this may be useful when requesting; information about applying for new products, clarification of terms and conditions, answers to questions about available services, the documents required in branch or to set up a review meeting. 2. Overdraft pricing Banks should review overdraft fees and make sure that they are transparent and fair. They should be relevant and proportionate to the amount overdrawn. Banks should be pro-active in the early identification of financial difficulty. They should contact consumers in cases where overdrafts are being used on a long term basis or where charges on accounts have incurred further charges. Banks should set up the same day retry system, allowing time for the money to clear in the account and the outgoing payment to be made. Banks should review overdraft facilities with consumers, making sure that the withdrawal of the service does not increase the potential of financial difficulty, following the principles in the Lending Code. Consumers do not feel that there is transparency in overdraft charges. Many people quoted examples of being charged fees of 25 or 30 for being overdrawn by less than 3. They believed that being charged an overdraft usage fee in addition to an interest rate and unpaid fees was excessive. Spiralling debt has been raised as a significant issue by debt advice organisations. Overdraft fees, especially for emergency overdrafts were thought to be too high and not proportionate to the amounts withdrawn. Advice agencies have found cases where consumers who claim benefit can be caught up in long term indebtedness as a result of such fees. Some consumers are afraid to set up overdrafts and have actually cancelled them and switched to standing orders because they feel there is a lack of control when managing payments that change dates. A change is needed on how banks make and receive payments on the same day. Improvements could stop consumers being hit with unnecessary penalty charges. There has been cause for concern that consumers who have set up overdrafts have had them withdrawn with immediate effect, despite asking to pay back over an agreed period. This leaves them unable to pay for daily living in the short term

9 I don t use online, I don t trust it. Female, Dungannon I ve a joint bank account with my husband and the bank noticed irregularity in our account and they phoned to say it was from my husband s card. They responded quickly to the irregular pattern and stopped the card. We never did hear the reason why this happened but it is reassuring to know that the banks do keep an eye on it. Female, Dungannon 3. Online Banking With reports of online fraud and phishing scams, many consumers feel that using online services is risky. Some consumers simply show no desire to use online banking or payment services as they feel that if something went wrong, they would be held liable or would be unable to access redress. Consumers want assurances that they will be protected online. It is reassuring to hear stories from some consumers that banks have detected fraud and helped restore them to their previous position. However, consumers who were affected have said they would like better explanations of how fraud is identified and how it actually happened. Some banks charge high prices for duplicate statements. Accessing these online could be a solution; however some banks display less than a year s data, which is not sufficient at times. Recommendation: Banks should review how they offer protection for online purchases and money transfers. They should communicate consumer rights so that consumers have assurances and clarity when they sign up to use online services and on an ongoing basis as the technology improves. When fraud is detected banks should offer consumers a detailed explanation of where and how the fraud occurred and what channels were used to commit the fraud. Banks should review how long they publish transactions online for and offer at least two year s historical data. Also, for equality purposes, duplicate paper statements should be available at a fair price, in relation to the cost of operations. 4. Written communications Consumers have asked for easy to understand APR, it s never simple and straightforward. It seems to be deliberately confusing. Male, Newcastle I think it would be good if banks actually had to distinguish between what is purely marketing post and what would actually affect your finances. This would be useful because you can open it up and actually read it. Male, Newcastle communications, in plain English and legible font size. Terms and conditions are often written in small font and are difficult to read. Consumers have asked that these are made more accessible and explained in plain language, especially It s always small, the terms and conditions, it s always small. Male, Belfast when there is a change that will affect how they operate their account. The inclusion of headings and a section on what action the consumer needs to take are useful tools. It s all in their language, jargon. Consumers do not want to receive promotional materials Female, Belfast that are not relevant to them. Many consumers do not understand the concept of Annual Percentage Rates (APR). It would be helpful if these could be explained using worked examples

10 People are kind of worried about their direct debits and not getting their income benefits if they switch. Male, Ballymena Banks should review all communications and use plain English and a legible font size for all information. They should highlight what action the consumer needs to take and give worked examples to improve consumer comprehension. The new dedicated switching programme beginning in September 2013 is designed to benefit consumers by giving clarity and providing a guarantee to consumers in the event something goes wrong when they switch banks. Consumers have shown an interest in this service and we will monitor how the service works in practice. Banks should review their product marketing techniques to ensure they only send consumers marketing material which they have agreed to receive. Consumers have asked that letters and leaflets are clearly marked so that they know what documents they must read and which ones are marketing related. Banks that are part of a group or that have multiple brands should review how they have communicated the Financial Services Compensation Scheme to consumers and test that it has been understood correctly and action taken where needed. Banks should carry out proactive communication and offer extra personal help to re-assure consumers that the switching process is safe and secure. Banks should display the overdraft scenarios in a prominent place at all times in branches, on websites and written communications; and refer to them when communicating with consumers annually about the right to switch. Banks should meet the switching service challenge by presenting new offerings in a way that consumers can easily compare the product and service features and know if they will get a better deal by switching. 5. Reliability of the switching process It is thought that less than four per cent of UK consumers have switched bank accounts in the last year. One of the major reasons cited is that consumers do not trust banks to switch payments like direct debits over correctly. 4 As there is a fear of things going wrong when switching bank account, consumers want assurance that dedicated staff will be able to help at every stage of the process. Most banks have posted the six overdraft scenarios agreed by the OFT on their websites. The Consumer Council encourages consumers to check these when they are researching a new personal current account. 6. Complaints processes that empower consumers Issue: If a problem arises, consumers want to be able to talk directly to a member of staff to resolve the issue. There is still a lack of confidence causing some consumers to feel that if they complain they wouldn t get anywhere. Recommendation: Banks should make the complaints procedure easy to access and visible within all branches, on websites and in writing. Verbal complaints should be recorded and treated equally to a written complaint. All complaints should be dealt with quickly and consumers should be given the contact details for the Financial Ombudsman Service in case they need further help as required in the Banking Conduct of Business Sourcebook. Even if I had a complaint to make I wouldn t do it because I wouldn t feel like I m getting anywhere. Female, Belfast 4. Ways to Pay, The Consumer Council, April

11 7. Packaged accounts that meet individuals needs Issue: Some consumers feel that they are not getting value for money as they do not use all of the elements of the packaged account. The only thing I ve used it for is for my mobile phone. Male, Belfast 8. Payments options Recommendation: Banks should review how they offer packaged accounts and consider offering more a la carte services to meet the desires and eligibility criteria of consumers. In 2012, it became evident to consumers how important Incident Management Plans were to deal quickly and effectively with IT problems. There s still a necessity for cheques in some cases. I m treasurer of an organisation and I couldn t operate with cash, it s out of the question. Male, Newcastle Consumers need to have confidence that financial institutions have all the tools and processes in place to safeguard their money and provide the vital service of making payments when required. Evidence, 5 shows that NI consumer confidence in respect of the security and reliability of payments has been damaged since the payments crisis that began in June Understanding the terminology and product structure for use of foreign currency is difficult, meaning that consumers don t know what they are paying. Consumers in focus groups discussed the fact that often they were only able to work out how much they have paid for currency exchange or goods after the transaction. 6 Our research shows that more than six in ten (63 per cent) of consumers said they would not know how to find out what exchange rate would apply if they shopped abroad using a debit card. Consumers need assurance from all banks that a technical payments systems crisis may never happen again. We recommend that all banks must review and test their Incident Management Plans that would identify the source of any arising problems and quickly allow faults to be tackled without disconnecting services and with appropriate communication with consumers. Banks must demonstrate that safeguards are in place, personal data and information are protected and a crisis communications strategy is in place. Cheque clearing, that is just the biggest rip off ever, the length of time it takes the bank to clear a cheque, there is absolutely no reason for it. Male, Dungannon Some consumers have pointed out that they rely heavily on cheques in situations where there is no other option, for example giving to charity. There also appears to be confusion about cheque clearing and how long consumers must wait before funds are cleared. Banks should continue to issue cheque books to consumers who use or request them. Clearer and more prominent information about cheque clearing needs to be issued to consumers. Banks should review the pricing structure and terminology used for the sale of foreign currency/travel cash and the use of debit cards outside the UK and how they display rates and fees. 5. Payment Pending: A Consumer Council report into the Ulster Bank payments crisis during summer December Ways to Pay, The Consumer Council, April

12 Next steps Appendix: We would like all banks operating in Northern Ireland to review the consumer evidence in this report and benchmark services against consumer expectations in each of the areas outlined. The recommendations should be considered and implemented where there are gaps in service provision. The Consumer Council intends this manifesto to be received and considered as a basis to make positive changes for consumers to ensure that services meet the needs and expectations of consumers. We would like to continue the positive working relationships we have with banks operating in Northern Ireland in the implementation of the recommendations, ensuring that consumers get the best deal possible in the long run. Research Methodology Evidence for this manifesto was gathered from a range of sources: Focus groups Six focus groups were held in March 2013 in Ballymena, two in Belfast, Dungannon, Newcastle and Strabane, with the use of a topic guide. The groups were representative of a range of ages and socio economic backgrounds and they all held a personal current account. Meetings with advice organisations The Consumer Council met with policy staff and debt advisors from Advice NI, Advice4debtNI, Omagh Independent Advice Centre and the Housing Rights Service. The purpose of discussions with these groups was to investigate and gather evidence about issues related to personal current accounts that had been reported by consumers who had sought debt advice. Throughout discussions, a number of other issues were also raised by debt advisors. These related to how debt advice organisations would like to work more quickly and efficiently with banks regarding consumers who experience financial difficulty. Meetings with banks Since the banking manifesto was first published using consumer evidence in 2011, we have met regularly with the main banks in NI. We have listened to their evidence on consumer behaviour. We have used the information provided to enrich our understanding of both consumer needs in retail banking and regulatory restrictions and have adapted the manifesto accordingly

13 Evidence from existing reports In January 2013, the Office of Fair Trading (OFT) published a progress update on its 2008 market study on personal current accounts in the UK. The OFT has made additional new recommendations, building on its previous initiatives, to make PCA costs more transparent, the switching process more reliable and to improve the way in which unarranged overdrafts are provided. It has called on banks to make rapid progress in implementing these recommendations, as well as being more proactive in ensuring that their products and services are better aligned with the needs of their customers. The Government intends to introduce stronger consumer measures including proposals to end unfair bank charges. This is being considered as part of the Consumer Credit and Personal Insolvency Review. Our policies in this area cover financial regulation reform, transparency of charges, affordable credit, financial capability, use of overdrafts and early identification of financial difficulty. In 2011, the Consumer Council published a report on The price of being poor, highlighting how poorer people pay more for everyday essentials and making recommendations for change. Some consumers are still financially excluded from a range of financial services and products. We are working with the Northern Ireland Executive to develop a financial capability strategy for NI. In this report we recommend that banks help consumers on a low income benefit from the provision of a basic bank account. Branch usage research In light of a number of recent announcements by banks to close branches, the Consumer Council commissioned Ipsos Mori in March 2013 to find out more about how often consumers visit branches and for what purpose. When was the last time you visited a branch? Within the last week 32% Within the last month 28% Within the last year 20% More than a year ago 10% Never 9% People in Northern Ireland use bank branches quite regularly. Eight in ten (80%) reported visiting a branch of a bank at least once in the past year, six in ten (60%) in the last month and three in ten (32%) in the last week, when the research was conducted. Just nine per cent claim that they have never visited a branch of their own bank. This increases to 17 per cent of DEs and 14 per cent of people aged 65 and over. Despite the number of banking services that are provided via telephone and online, branch usage is still reported as high, and a sizeable proportion of people in Northern Ireland stated that they are still using them on a regular basis

14 Which of the following reasons describe why you visit a branch? To do something that can t be done online or by phone 67% I am not comfortable using banking services online or by phone 22% To meet with an advisor I have a very complex issue that can t be sorted out by phone or online 5% 10% Other 4% For the vast majority (67%) the main reason for visiting a branch is to do something they believe cannot be done online or by phone. The second main reason for visiting a branch is consumers displaying a lack of comfort with using online or phone services (22%). As would be expected, older people (32% of those aged 55 and over) are much more likely to use a branch because they are not comfortable using online or phone compared to 13 per cent of year olds. 24

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