2,000 reasons to hate this bank

The big banks are receiving thousands of complaints a day as consumers take a stand against unjust charges and shoddy products - and new rules are forcing them to publish our grievances in full. We sift through the evidence to name Britain's worst banks - and show you how to switch to a better deal

The secret the big banks don’t want you to know about is now out in the open. New rules imposed by City watchdog the Financial Services Authority (FSA) now compel banks to publish both the number of complaints they receive and the number of grievances they reject - and the figures released so far don’t make pretty reading.

Some banks - including giants Barclays and HSBC - have yet to issue figures for the first half of the year. But other major banks have gone on the record - and among the worst offenders are those institutions bailed out by the taxpayer at the height of the credit crisis. 

The bank that received the most number of complaints this year is Lloyds TSB. The bank admitted this week that it received 146,846 complaints in the first six months of the year - that’s nearly 2,000 complaints per working day (1,850 to be exact).

Just over 100,000 customers contacted Lloyds to report problems relating to current accounts, credit cards, loans and savings, including grievances related to overdraft charges and customer service issues. Yet most will have been left unsatisfied - according to the FSA, just 12% of all banking complaints ended in an apology or compensation.

Lloyds TSB is not alone in this. Elsewhere, part State-owned Royal Bank of Scotland received 160,000 complaints a day, while the Bank of Scotland group - which includes mortgage giant Halifax - received 115,638 complaints. 

Britain’s worst bank?  

Perhaps the bank with the most to do to improve its customer service is Spanish giant Santander. To say Santander has experienced teething problems since swallowing up Abbey and Alliance & Leicester would be an understatement.

In the first six months of the year the bank received 245,000 complaints from its 18 million current account customers, representing a higher percentage of customers complaining than Lloyds and its other rivals. The bank received 216,000 complaints (excluding bank charge refunds) relating to its current account services, with more than half rejected.

The bank’s head of complaints Steve Williams was forced to apologise last week for a series of customer service lapses, including problems with online accounts being accessed and simple transactions not being fulfilled. The bank has stressed that it has suffered problems integrated its separate businesses and promised to improve standards in future.

People’s poll   

The hard data above chimes with the findings of a recent major poll from consumer watchdog Which? into customer service standards. The usual suspects were at the foot of the Which? Money People's Choice poll of current account providers. Santander / Abbey and Halifax brought up the rear, with last place held by Bank of Scotland. Fewer than half of those polled would recommend those banks to a friend.

Smaller banks scored best in the survey, with First Direct’s current account topping the poll, with an overall satisfaction score of 82%, with offset-mortgage the One Account and online bank Smile close behind.  

Find a better deal

The ideal current account should come with exemplary customer service, give you the best rate of interest when you’re in the black, charge the least if you go overdrawn and match your lifestyle perfectly. Of course, the perfect account doesn’t exist - but chances are you could benefit by switching banks.

What’s more, you could even bag cold, hard cash for doing so. Move to First Direct’s 1st Account, and you'll receive £100 simply for switching - although you need to pay in at least £1,500 a month to qualify for fee-free banking. The account comes with an interest-free overdraft of £250 and regularly tops customer service satisfaction polls - but bear in mind that you won’t receive any interest on your balance when you’re in the black.

If you regularly stay in the black, you’ll obviously want to look to the account paying the highest level of interest. If you believe Santander’s vows to improve its customer service, it could be worth investing your money in its Preferred In-Credit Rate account, which pays a handsome 5% on balances up to £2,500 for 12 months in addition to a £100 reward for switching. If you dip into the red, however, this account isn’t for you - overdraft interest is a hefty 19.9%.

Finally, you may also want a look at the Nationwide Flex current account - although it doesn’t charge a monthly fee, it comes with many perks typical of fee-charging accounts including free European multi-trip travel insurance and access to the cheapest personal loan rate around at just 7.7%. The deal also comes with a free three-month overdraft facility - although this does climb to a steep 18.8% afterwards – but doesn’t pay credit interest.

Take charge of your daily spending with our exclusive online banking tool and keep ahead of the best deals around with our constantly updated list of Current Account Best Buys.

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