Revealed: Britainʼs worst banks
- From: Robin T Cox <nomail@xxxxxxxxxx>
- Date: Mon, 13 Aug 2007 13:47:22 GMT
Revealed: Britain’s worst banks
How bad is your bank? Our survey ranks the high street on everything from
current accounts to mortgages to tell you what you should dump
Clare Francis
The Sunday Times
August 12, 2007
http://business.timesonline.co.uk/tol/business/money/consumer_affairs/article2240363.ece
http://tinyurl.com/2qscek
NATWEST has been named as the worst high-street bank in a comprehensive
survey that ranked all the big names across their product range to reveal
exactly how they are ripping off customers.
The big five – HSBC, NatWest, owned by Royal Bank of Scotland, Barclays,
Halifax Bank of Scotland, and Lloyds TSB – are on target to make record
profits of nearly £40 billion this year, thanks to their paltry current
account rates, derisory savings interest and punitive charges.
Nevertheless, more than half of us still have at least our current account
with a high-street bank, and more than two-thirds buy investments from a
bank or building society.
The Sunday Times asked a panel of industry experts to rank the big
high-street banks on their current accounts, credit cards, savings,
mortgages and investments.
In one of the most exhaustive surveys conducted, they were marked out of
10 in each of the five areas. For savings, for example, they were ranked
across their entire range on rates as well as consistency and
transparency. For mortgages, our experts looked at service and fees as
well as rates.
The results were then condensed to give an overall average score, so
customers can compare their bank with the rest of the high street and
decide whether to switch.
Our experts evaluated the big five as well as Abbey and Alliance &
Leicester (A&L), which took top spot in our survey.
NATWEST
Score: 4.9 out of 10
The Good One of the few products that stands out as a good deal is
NatWest’s Classic Credit card. New customers benefit from a 13-month
interest free period on balance transfers and the bank’s transfer fee is
one of the lowest at 2% – Barclays, Halifax and Lloyds TSB charge 3%.
The card also charges a competitive standard rate of interest at 13.9% –
the average rate charged by the other big banks is 15.9%.
The Bad Sue Hannums at AWD Chase De Vere, an independent adviser, said
none of its savings accounts pay competitive rates of interest.
The Reward Saver, for example, pays between 3.75% and 4.1%, depending on
the balance, but the rates include a one percentage point bonus if you
make just one withdrawal a year. If you make more, the bonus reduces.
NatWest’s mortgages were also ranked bottom by James Cotton at L&C
Mortgages. He said: “It has one of the highest standard variable rates at
7.94% and it levies a higher lending charge on loans above 90%. It can be
good in specialist areas, but its standard mortgage deals can usually be
beaten.”
NatWest said: “We are very surprised by the results and believe that they
are misleading. Regular independent research shows customers recognise
that NatWest offers great value and excellent service.
“For example, we believe we offer the best value of the banks on Isas,
credit cards, and offer £1,000 if we can’t beat competitors’ mortgage
deals.”
LLOYDS TSB
Score: 5.1 out of 10
The Good Cheltenham & Gloucester (C&G), Lloyds TSB’s mortgage division,
has recently abolished its £225 exit fee for new customers, and it also
has a very competitive lifetime tracker at 0.17 points above Bank rate,
giving a current rate of 5.92%. There is no arrangement fee and free
valuation and legal work. It is available on loans up to 60% of the
property’s value. The Bad Lloyds TSB’s penalty fees on current accounts
are high. It charges £35 if a direct debit is refused.
The bank has also removed a £10 buffer that it used to give customers in
case they slipped into the red by mistake, so anyone who does not have an
overdraft facility set up could face penalty fees even if they go
overdrawn by just a few pence.
Lloyds has also put up the interest rate when you go overdrawn with
authorisation from 18.2% to 19.3%. The unauthorised rate is 29.8%.
BARCLAYS
Score: 5.2 out of 10
The Good Woolwich, Barclays’ mortgage arm, has a lifetime tracker that is
virtually identical to the C&G deal.
The Bad If you have a current account with Barclays, move. It controls
about 20% of the current-account market, according to Credit Suisse, yet
its standard account pays just 0.1% on balances in credit. The authorised
overdraft rate is 15.6%, but you will pay 27.5% if you exceed your limit,
or go into the red without authorisation.
HALIFAX
Score: 5.4 out of 10
The Good The Halifax One Credit card offers the longest interest-free
period for both balance transfers and purchases.
Robert Kenley at Moneysupermarket said: “This card really stands out
because cardholders get a 12-month 0% deal for both purchases and
transfers. Customers are often caught out when the 0% deal on each element
is of different lengths.”
For example, Virgin’s credit card offers a 15-month interest-free period
on balance transfers but purchases are only exempt from interest for three
months.
The Bad Halifax has one of the worst savings accounts. Liquid Gold, a
market leader in the 1980s, pulled in billions of pounds but now pays just
1.36%. Its Guaranteed Saver pays a more competitive 5.75% on £5,000 or
more, but Sainsbury’s Bank’s Internet Saver pays 6.25%.
ABBEY
Score: 5.8 out of 10
The Good Abbey has one of the best cash Isas on the market. Savers earn 6%
up to £9,000 and 6.25% on anything above. This is particularly good
because most of the leading deals only accept the current year’s £3,000
allowance; they do not accept transfers of previous year’s Isas. But bear
in mind that Abbey’s Isa includes a 0.5 percentage point bonus until May
2008.
The Bad Justin Modray at Bestinvest, an adviser, ranks Abbey’s UK Growth
fund as one of the worst. The £1.3 billion fund has failed to beat the
FTSE All-Share index in all but two of the past 10 years. It has returned
68.4% in the last five years, against 93.5% for its sector. Abbey has
announced it is bringing its funds back in-house, but Modray does not
expect things to get much better.
HSBC
Score: 5.9 out of 10
The Good Bestinvest gave HSBC 7.5 out of 10 for its investment range, the
highest of the big banks.
Unlike the other main players, it offers investment funds from a range of
providers.
Investors would still get a greater choice from an independent adviser,
but included in its range are Invesco Perpetual Income, Schroder Global
Property Securities and Schroder European Alpha Plus, all of which are
funds Bestinvest recommends to clients.
The Bad You should be wary of HSBC’s Online Saver. It advertises a rate of
6.25%, but customers do not receive interest in any month they make a
withdrawal.
HSBC is also offering fee-free mortgages until the end of September, but
none of HSBC’s rates are particularly competitive.
A&L
Score: 6.5 out of 10
The Good Alliance & Leicester’s Premier Direct current account is the best
of all the big names. Moneysupermarket, a comparison site, gives it 10 out
of 10 for both its in-credit interest and its overdraft rate. Customers
receive 6.5% on balances up to £2,500 until October 30 next year, after
which it reverts to one point below Bank rate. This gives a current rate
of 4.75% – better than the 0.1% paid by Barclays, NatWest, HSBC and Lloyds
TSB.
The overdraft facility is is interest-free for the first year, and 5.9%
thereafter – against NatWest’s rate of 19.99%.
The Bad A&L has been one of the worst offenders when it comes to letting
savers down. There have been five quarter-point rate rises since last
August, yet the bank has not passed on the full increases to all of its
savers. Those with its Phone Saver account, for example, have seen their
savings rate increase by only 0.7 points.
Watch out for A&L’s Direct Saver. It seems good because you can earn 6.3%
above £1,000. Buy you earn no interest in any month you make a withdrawal.
THE LEAGUE TABLE
The top performers
Alliance & Leicester Scores with a market-leading current account paying
6.5% in the first year on up to £2,500, and mortgages that often feature
in the best-buy tables.
HSBC The best investment range on the high street, although you should
still watch out for catches in its savings accounts.
Mid-table mediocrity
Abbey One of the best cash Isas on the market, but its performance is let
down by its investment range, particularly its sluggish £1.3 billion UK
Growth fund.
Halifax Its credit card is among the best on the market, but its Liquid
Gold savings account, paying just 1.36%, is among the worst.
Barclays A poor current account and savings range is pulled up only by a
decent performance from Woolwich, its mortgage arm.
The relegation zone
Natwest Gets the red card because our panel said none of its savings
accounts paid decent rates, and its mortgages are almost always beaten.
Lloyds TSB Let down by its poor current accounts, with high overdraft
rates and particularly punitive fees if you accidentally fall into the red
or exceed your overdraft limit.
.
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