Halifax Bank yesterday accused Britain's four largest current account providers of wasting £2.2bn of customers' money over the past five years. Halifax, part of the HBOS group, said the figure represented the total cost of the big four banks' failure to offer better interest rates to customers in credit and lower rates on overdrafts.
Peter Jackson, managing director of banking and savings at HBOS, claimed attempts by Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland-owned NatWest to respond to competition from rival current account providers had fallen short.
"While some of the big four have made moves to improve their current account offering, they have failed to open these offers up to their loyal existing customers and in some cases, have made qualification for better rates subject to several criteria," Jackson said.
"Instead, these customers have been left earning 0.01 per cent interest and paying authorised overdraft rates of around double those available from other providers."
Halifax is one of several banks that is attempting to break the stranglehold of the big four on current accounts. Five years ago, it launched an account paying 4 per cent annual interest on credit balances with an overdraft rate of 10 per cent.
The deal substantially undercut the big four, which generally paid 0.1 per cent annual interest to customers in credit while charging close to 20 per cent for overdrafts.
Since then, however, Halifax has reduced its credit interest rates, and meanwhile a number of smaller banks, including Alliance & Leicester and the internet-based Smile, as well as Nationwide Building Society, have launched more competitive products.
In addition, the major banks have made some improvements to their current accounts. Lloyds TSB now pays some customers 3.93 per cent annual interest, while all of the big four have reduced the cost of maintaining overdrafts.
However, despite these upgrades, the consumer group Which? has continued a campaign to persuade current account customers with the big four to move to better deals. "Switching accounts may not make your fortune, but why give money away for no reason," a spokesman said.Reuse content