At present – when consumer confidence in financial institutions is at its lowest ebb for over 60 years – there is good reason to reevaluate retail banks’ relationship with their customers at its most fundamental level: the current account.
The arrival of service-focused Metrobank and Santander’s recent cash incentive to switch providers have sparked consumer attention on the lowly current account.
What do customers really care about? A new report for YouGov SixthSense suggests that bank charges are the foremost consideration when consumers are looking for a new account. This should come as little surprise to many – the past three years have seen the number of current account related complaints to the Financial Ombudsmen balloon compared to the numbers in 2005 to 2007, with 25,252 complaints made in 2010.
Fifty-four per cent of YouGov respondents agree that fines relating to exceeding an overdraft are “legitimate”, making it the most acceptable form of bank charge. However, only five per cent of consumers are willing to tolerate monthly banking fees for banking services like debit cards, direct debits and standing orders.
The greatest acceptance of charges for exceeding overdraft limits currently lies with those who are happiest with their banking service. It also seems that consumer perception of banking institutions hinges greatly on the consumer’s understanding and acceptance of certain bank charges – an informed accountholder is a happy accountholder.
Yet 40 per cent of respondents say that they have not fully read their account’s official documentation, but “broadly” know what they may be charged, and in what circumstances; One in five account holders report that they have read the documentation in the past but “can’t remember it now”. Only one in four account holders claim that they have read all the relevant documentation and understand when and why charges may arise. Educating customers may be the banks’ strongest weapon.
Stephan Shakespeare is founder and chief executive of YouGov.