RBS customers may reach for the switch after fiasco

Ben Southwood
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Furious customers were searching for a way out of their relationship with part-nationalised banking group RBS yesterday as promises of further extensions to normal opening hours failed to reassure.

Comparison site Moneynet.co.uk reported a 10 per cent jump in hits from those searching for alternative current account providers.

One business leader told City A.M.: “This is the final straw and I’ve now got the directors to agree.” Citing FSA-imposed paperwork requirements on switching business accounts as the reason his firm had not left RBS before, he added: “There will be lots of companies like us.”

The Federation of Small Businesses said that “severely affected” smaller firms welcomed compensation but were disrupted “in a variety of ways difficult to quantify in cash terms.”

In an interview yesterday, RBS chief executive Stephen Hester promised that the group’s “broad shoulders” would mean that no limit would be put on the fund for redress.

Investec analyst Ian Gordon suggested that even if the situation were quickly brought under control, the costs of the fiasco so far could still have already reached £100m.

Hester also suggested that his customers were extremely impressed with the group’s response to the crisis, and would be unlikely to switch banks, despite the severe inconveniences many experienced.

This comes as a significant minority of account holders are still unable to access their funds, and many users’ transactions are caught in the backlog. Housing transactions have collapsed and salaries have gone unpaid. The bank yesterday announced that 1,200 branches will open from 8am to 6pm this week.

The RBS Group has come under intense scrutiny for its lack of a working backup system. However, Hester denied suggestions from the union Unite that outsourcing or cost-cutting was to blame for the failure, claiming that “the UK backbone received substantial investment”.

Rivals resisted the temptation to profit from RBS’s humiliation. Lloyds said it had had few customers complaining, but was ready to help any affected, while Barclays declined to comment. HSBC said it would not run a campaign to attract disaffected customers and stressed the banks were “rallying together” in the crisis.