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Spend & Save

Money Insider: A big chance for banks to drop the hard sell


Aside from the banking crisis of 2008, the past couple of weeks have been some of the most turbulent in the history of UK financial services.

The major computer problems at RBS and the sale of unsuitable and complex products to small businesses were serious issues in their own right, but they almost paled into insignificance when the manipulation of interbank lending rates came to light.

As a result an inquiry into the banking industry will take place, and whether it's carried out by a cross-party parliamentary committee or an independent body, it needs to look at the culture, the standards and conflicts of interest that have driven the banking sector to the low point where it sits today.

The issue is wider than just the banks. The city expects multibillion-pound profits to be delivered year in, year out, otherwise the share price takes a hit, so it's no wonder that excessive bonuses are on offer for those who deliver these levels of profitability, whatever the cost.

While the five- and six-figure bonuses are reserved for those working in the investment banking sector, the frontline branch staff take the brunt of customer anger and frustration every day. It's those same branch staff that face demanding monthly sales targets in order to achieve financial bonuses, or face the threat of being put on a performance improvement contract if their sales figures aren't up to scratch.

Gone are the days when you could go into your branch with a query concerning your account and get it sorted without being given the hard sell. Now you can barely set foot in the door without someone trying to "upgrade" you to a packaged account or suggest you have a "financial review" with the in-branch financial adviser.

The investigation, whoever ends up leading it, has an enormous task on its hands, but in the back of its mind it needs to consider how the current "sales culture" impacts on branch staff and ultimately on the consumer.

We need to get back to basics, where service is paramount, products are good value and simple to understand, charges are fair and transparent and American-style sales tactics are kicked into touch once and for all.

M&S Bank and Virgin Money are soon to launch their own bank accounts, and while some new blood is welcome, let's hope it comes with some fresh ideas of how to encourage consumers to buy additional products based on consistent quality service and trust of the brand.

This is a massive opportunity to reshape the way our banking services are delivered. Here's hoping the chance isn't wasted.

Better news for savers

Co-operative Bank has just increased the rates on its fixed-rate savings accounts and the three bonds now occupy the number one slot in the best buy tables.

The bonds pay 3.5 per cent AER fixed for one year, 3.75 per cent AER for two years and 4 per cent AER for three years.

The minimum balance requirement is much lower than some competitor products at just £1,000, plus you can elect to have your interest paid monthly if you're looking for a regular income from your savings.

This is an aggressive move from the co-operative bank, which now occupies number one slot in the fixed-rate savings market for one, two and three-year terms.

With the growing level of bad feeling towards some of the high street banking giants in the past couple of weeks, this is perfect timing from a provider which has long been respected for its ethical stance.

You can apply for the co-op bonds in branch, by post, online or by phone on 0800 028 4470.

Coventry Building Society has also launched a couple of attractive savings propositions. First there's a fixed-rate bond with an 18-month term paying an excellent 3.65%, a rate better than many other providers are offering for a two-year term. The bond can be opened from £1 with a maximum balance of £250,000 permitted.

Again savers have the flexibility of being able to have their interest paid to another account on a monthly basis, a feature that's becoming increasingly popular.

The Coventry is also offering a Telephone Saver account paying a very decent rate of 3.25 per cent AER. The rate is variable although it is boosted by an initial 12-month bonus of 1.25 per cent.

You can pay in to the account until 31 October 2012, although it must be at least £500 per deposit. Unlimited penalty-free withdrawals are permitted, but again must be for a minimum of £500. For further information, check the details online or phone 08457 665522.